LIBRARY 

OF  THE 

UNIVERSITY  OF  CALIFORNIA. 


Class 


PRELIMINARY  REPORT 


ON  THE 


INVESTIGATION   INTO   THE   MANAGEMENT 


OF 


The  Equitable  Life  Assurance  Society 
of  the  United  States 


MADE  TO  THE 


GOVERNOR  OF  THE  STATE  OF  NEW  YORK 

BY  THH 

SUPERINTENDENT  OF  INSURANCE 

AS  OF  JUNE  2J,  J905 
WITH  ADDENDUM  COVERING  MATTERS  REFERRED  TO  THEREIN 


THE  SPECTATOR  COMPANY 

135  WILLIAM  STREET 

NEW  YORK 


SAL 


STATE  OF  NEW  YORK, 

INSURANCE  DEPARTMENT, 

ALBANY,  June  20,  1905. 

To  the  Honorable  FRANK  W.  HIGGINS,  Governor  of  the  State  of 
New  York: 

Sir — The  Equitable  Assurance  Society  of  the  United  States  is 
one  of  the  largest  insurance  companies  of  the  country.  It  was 
examined  by  the  Insurance  Department  in  the  year  1901  and 
found  entirely  solvent.  Its  annual  report  for  the  year  1904  shows 
that  it  was  financially  sound,  had  a  large  surplus  and  was  in  a 
prosperous  condition.  It  was  therefore  a  great  surprise  to  me  as 
well  as  to  the  public  generally  when  internal  dissension  arose  in 
this  institution.  It  started  in  the  Equitable  Building,  the  home 
office  of  the  Society,  in  the  city  of  New  York,  and  among  its 
directors  and  highest  officers. 

The  annual  meeting  of  the  Board  of  Directors  was  held  on  the 
81  h  day  of  February,  1905.  At  that  meeting  the  president  of  the 
Society,  Mr.  James  W.  Alexander,  presented  a  petition,  dated 
February  2,  1905,  signed  by  himself  and  thirty-three  other  officers 
of  the  Society,  praying  that  policyholders,  holding  policies  of 
f 5,000  or  upwards,  may  be  empowered  to  vote  for  directors  as 
provided  for  in  the  charter,  which  amounted  to  partial  mutualiza- 
tion.  He  filed  with  that  petition  an  opinion  signed  by  five  eminent 
lawyers,  to  the  effect  that  the  directors  had  the  requisite  power  and 
authority  to  confer  upon  such  policyholders  the  right  to  vote  at 
the  annual  election  of  directors.  He  also  submitted  a  draft  of  a 
proposed  amended  charter  and  with  it  filed  a  written  opinion  of 
these  same  lawyers,  dated  February  7,  1905,  advising  that  it  could 
be  lawfully  adopted  by  a  vote  of  a  majority  of  the  directors.  At 
the  same  meeting  the  president  submitted  another  petition,  dated 
February  7,  1905,  and  signed  by  himself  and  thirty-eight  other  offi- 
cers of  the  Society,  protesting  against  the  re-election  of  Mr.  James 
H.  Hyde  as  vice-president.  The  Board  of  Directors  took  these 
petitions  and  opinions  under  advisement,  and  at  a  subsequent 
meeting  all  the  officers  of  the  preceding  year  were  re-elected,  com- 


mittees  were  appointed  and  the  Board  adjourned.  The  proposed 
amended  charter  was  not  adopted,  and  while  some  effort  in  that 
direction  was  made  nothing  was  accomplished  toward  the  niutuali- 
zation  of  the  Society. 

In  the  meantime  Mr.  Alexander  submitted  to  a  committee  of 
the  Board,  known  as  the  Committee  of  Twelve,  a  long  statement 
in  favor  of  mutualization<  and  criticising  certain  action®  of  James 
H.  Hyde  as  Vice-President.  Mr.  Hyde  quickly  replied  with  a  long 
communication  to  the  Board  of  Directors,  defending  his  rights 
as  the  owner  of  the  majority  of  the  stock  and  explaining  his  con- 
duct as  Vice-President.  Thereupon  the  Board  of  Directors  di- 
vided into  factions,  also  the  officers  of  the  Society,  charges  and 
counter-charges  were  made,  crimination®  and  re-criminations  fol- 
lowed. The  press  took  up  the  controversy  and  continued  to  pub- 
lish startling  statements  as  to  the  management  of  the  Society, 
to  such  an  extent  that  the  policyholders  of  the  Society  became 
alarmed  as  to  its  solvency  and  their  fears  excited  as  to  the  assets 
of  the  Society  being  dissipated  by  the  officers.  The  Superintend- 
ent of  Insurance  thereupon  determined  to  make  am  examination 
of  the  Society  to  determine  its  financial  condition,  and  for  that 
purpose  appointed  Robert  H.  Hunter,  First  Deputy  of  the  De- 
partment, and  Isaac  Vanderpoel,  Chief  Examiner  of  the  Depart- 
ment. Later,  on  account  of  charges  that  were  made  by  the  Presi- 
dent of  the  Society  of  misconduct  on  the  part  of  some  of  its 
officers,  it  was  determined  to  make  an  investigation  of  these 
charges  and  of  its  business  management,  which  I  personally  con- 
ducted with  the  aid  of  the  Honorable  M.  E.  Driscoll  as  special 
counsel. 

Section  39  of  the  Insurance  Law  of  the  State  of  New  York 
provides  as  follows: 

"  The  superintendent  of  insurance  shall,  as  often  as  he  deems 
it  expedient,  appoint  one  or  more  competent  persons  not  officers 
of  or  connected  with,  or  interested  in  any  insurance  corporation 
doing  business  in  this  state,  other  than  as  a  policy  holder,  as 
examiners  to  examine  into  the  affairs  of  any  such  corporation. 
Such  examiners  may  examine  under  oath  the  officers  and  agents 


of  any  such  corporation  and  its  books,  with  reference  to  its 
business.  Such  corporation,  its  officers  and  agents,  shall  pro- 
duce its  books  and  all  papers  in  its  or  their  possession  relating 
to  its  business  or  affairs  for  the  inspection  and  examination  of 
such  examiners  whenever  required;  and  shall  facilitate  such 
examination  and  aid  the  examiners  in  making  the  same  so  far 
as  it  is  in  their  power  to  do  so." 

Many  of  the  officers  and  directors  of  the  Society  were  there- 
after from  time  to  time  examined  by  me  under  oath  and  their 
evidence  reduced  to  writing.  I  examined  many  of  the  Society's 
deeds,  mortgages,  leases,  records  and  accounts,  and  in  short  all 
papers  and  documents  which  seemed  to  me  necessary  or.  per- 
tinent to  the  inquiry,,  and  in  addition  copies  of  all  reports,  pro- 
ceedings, letters  and  papers  of  every  kind  which  were  furnished 
to  the  Frick  Committee  from  time  to  time,  were  submitted  to 
me  for  examination. 

After  reading  such  papers  and  documents  and  the  evidence 
taken  before  me,  and  after  due  consideration,  I  respectfully 
submit  the  following  report: 

The  Equitable  Life  Assurance  Society  of  the  United  States  was 
incorporated  in  the  year  1859  pursuant  to  the  provisions  of  an 
act  entitled  "An  act  to  provide  for  the  incorporation  of  life  and 
health  insurance  companies,  and  in  relation  to  agencies  of  such 
companies,"  passed  June  24,  1853,  and  the  amendments  thereto. 
The  provisions  of  its  certificate  of  incorporation  commonly  known 
as  its  charter,  which  are  pertinent  to  this  inquiry  and  may  be 
interesting  to  its  policyholders,  are : 

"  Article  3.  The  capital  of  said  company  shall  be  one  hundred 
thousand  dollars  in  cash,  divided  into  one  thousand  shares  of  one 
hundred  dollars  each;  which  shall  be  personal  property,  trans- 
ferable only  on  the  books  of  the  company,  in  conformity  with  its 
by-laws.  The  holders  of  the  said  capital  stock  may  receive  a. 
semi-annual  dividend  on  the  stock  so  held  by  them,  not  to  exceed 
three  and  one-half  per  cent,  of  the  same,  such  dividends  to  be  paid 
at  the  times,  and  in  the  manner  designated  by  the  directors  ot 


said  company.  The  earnings  and  receipts  of  said  company,  over 
and  above  the  dividends,  losses  and  expenses,  shall  be  accumulated. 

"Article  4.     *     *     * 

"  The  board  of  directors  shall  consist  of  fifty-two  persons,  a 
majority  of  whom  shall  be  citizens  of  the  State  of  New  York, 
each  of  whom  shall  be  a  proprietor  of  at  least  five  shares  of  the 
said  capital  stock. 

"  The  board  of  directors  may,  previous  to  any  annual  election, 
and  after  giving  notice  at  the  previous  meeting  of  the  board,  pro- 
vide for  diminishing  the  number  of  directors  to  not  less  than 
twenty-four,  in  which  case  one-fourth  of  the  total  number,  as  thus 
diminished,  shall  be  elected  annually,  in  the  same  manner  as 
hereinafter  provided,  in  regard  to  the  fifty-two  directors  above 
named;  and  the  same  powers  and  authority  shall  vest  in  said 
board  of  directors,  thus  diminished,  as  were  previously  exercised 

by  the  former  board  of  directors. 

###»*###•*** 

"  In  the  election  of  directors,  every  stockholder  in  the  company 
shall  be  entitled  to  one  vote  for  every  share  of  stock  held  by  him, 
and  such  vote  may  be  given  in  person  or  by  proxy.  At  any  time 
hereafter,  the  board  of  directors,  after  giving  notice  at  the  two 
previous  stated  meetings,  may,  by  a  vote  of  three-fourths  of  all 
the  directors,  provide  that  each  life  policyholder,  who  shall  be 
insured  in  not  less  than  five  thousand  dollars,  shall  be  entitled 
to  one  vote  at  the  annual  election  of  directors,  but  such  vote  shall 
be  given  personally,  and  not  by  proxy. 

"  The  board  of  directors  shall  have  power  to  declare,  by  by-law, 
what  number  of  directors,  not  less  than  seven,  shall  constitute  a 

quorum  for  the  transaction  of  business. 

###******•*# 

"Article  6.  The  insurance  business  of  the  company  shall  be  con- 
ducted upon  the  mutual  plan." 

This  charter  has  never  been  amended.  By-laws  were  adopted 
in  pursuance  of  the  provisions  of  the  charter  and  have  been 
amended  from  time  to  time.  Fifty-two  directors  were  named  in 
the  Society's  charter  and  the  same  number  has  been  continued 
until  the  present  time. 


5     V' 

With  this  Charter  and  Board  of  Directors,  the  Society  started 
in  business.  The  late  Henry  B.  Hyde,  father  of  James  H.  Hyde, 
was  its  founder  and  leading  personality  in  its  creation  and 
growth  until  the  time  of  his  death,  which  occurred  in  May,  1899. 
Early  in  the  history  of  the  Society  he  secured  a  majority  of  the 
stock,  which  he  constantly  held  and  transmitted  by  deed  of 
trust  to  his  son.  By  reason  of  his  stock  control  and  his  com- 
manding ability  he  absolutely  dominated  the  Society  in  all  direc- 
tions. He  was  possessed  of  untiring  energy  and  zeal.  He 
worked  early  and  late  and  inspired  others  with  much  of  his  own 
enthusiasm  and  enterprise.  He  watched  over  its  affairs  in  all 
directions  and  even  solicited  insurance  on  the  streets.  Under 
his  direction  and  management  the  Society  grew  in  public  con- 
fidence, and  before  his  death  it  became  one  of  the  largest  and 
most  extensive  insurance  companies  in  the  world.  But  he  did 
not  neglect  his  own  interests  or  those  of  his  immediate  asso- 
ciates and  dependents  in  the  Society.  As  business  increased 
and  money  began  to  flow  into  the  treasury,  and  the  real  or 
apparent  surplus  began  to  grow,  he  conceived  the  idea  of  con- 
structing or  buying  office  buildings  in  the  larger  cities  in  this 
country  and  also  in  Europe.  They  were  claimed  to  be  a  useful ' 
advertising  medium,  in  impressing  the  policyholders  and  general 
public  with  the  large  surplus,  substantial  property  and  wise  con- 
servatism of  this  institution.  But  they  incidentally  served  an- 
other and  more  selfish  purpose. 

THE  MERCANTILE   SAFE  DEPOSIT  COMPANY. 

The  present  home  office  building  at  120  Broadway,  New  York 
City,  was  the  first  of  these,  and  it  occurred  to  Mr.  Hyde  that  its 
lower  floor  would  be  a  convenient  and  desirable  place  for  safe 
deposit  vaults,  and  that  such  business  would  be  profitable.  He 
therefore,  some  time  prior  to  the  1st  day  of  January,  1876,  or- 
ganized a  corporation  known  as  the  Mercantile  Safe  Deposit 
Company,  and  on  the  1st  day  of  January,  1876,  the  Society  leased 
to  this  Mercantile  Safe  Deposit  Company  rooms  and  accommo- 
dations1 in  the  Equitable  Life  Building.  The  lease  was  for 


twenty-five  years,  from  January  1,  1876,  until  January  1,  1901, 
with  the  privilege  to  the  lessee  of  renewing  it  for  twenty-five  years 
more  at  the  expiration  of  that  period.  The  annual  rent  reserved 
was  as  follows:  The  first  fifteen  thousand  dollars  received  by 
the  tenant  as  net  rental  for  said  vaults,  safes,  places  of  deposit, 
after  the  payment  of  all  expenses,  went  to  the  landlord;  the 
second  fifteen  thousand  dollars  went  to  the  tenant,  and  the  bal- 
ance was  equally  divided  between  the  landlord  and  the  tenant. 

This  lease  was  executed  on  the  part  of  the  Society  by  H.  B. 
Hyde,  President,  and  attested  by  Samuel  Borrowe,  Secretary. 
Thereafter  and  on  the  9th  day  of  January,  1883,  seventeen  years 
before  the  expiration  of  the  lease  above  referred  to,  the  Society 
made  a  new  lease  with  this  same  tenant  with  no  apparent  reason, 
unless  it  may  be  to  extend  the  term  and  have  another  officer  than 
H.  B.  Hyde  execute  it  on  the  part  of  the  Society.  This  second 
lease  provides  for  the  same  rent  and)  contains  substantially  the 
siame  conditions  as  the  one  for  which  it  was  substituted.  It  was 
to  terminate  on  the  1st  day  of  January,  1901,  but  provided  for 
two  renewals  at  the  option  of  the  lessee  of  fifty  years  each,  which 
will  continue  it  until  the  year  2001,  on  the  same  terms  and  condi- 
tions contained  ini  the  old  lease.  This  lease  was  signed  on  the 
part  of  the  Society  by  James  W.  Alexander,  Vice-President,  and 
William  Alexander,  Secretary.  (See  Exhibit  1,  Addenda.) 

Thereafter  and  on  the  14th  day  of  April,  1888,  the  Society  leased 
to  this  same  tenant  several  additional  rooms  and  extra  space  of 
large  rental  value  with  no  additional  rent.  This  instrument  was 
executed  on  the  part  of  the  Society  by  James  W.  Alexander,  Vice- 
Presldent,  and  William  Alexander,  Secretary. 

Again  and  on  the  8th  day  of  October,  1900,  the  Society  entered 
into  another  lease  with  this  same  tenant,  which  was  really  the 
exercise  of  a  renewal  option  contained  in  the  former  lease.  This 
instrument  was  executed  on  the  part  of  the  Society  by  James  W. 
Alexander,  President,  and  George  T.  Wilson,  Third  Vice  Presi- 
dent. The  Safe  Deposit  Company  is  now  in  possession  under 
this  last  lease.  All  these  leases  provide  that  the  lessor  must 
make  all  improvements,  alterations  and  repairs,  and  must  light, 


heat,  water,  janitor,  watch  and  clean  the  premises  and  incur  all 
expenses  for  care  and  maintenance.  Yet  it  receives  only  one- 
half  of  the  net  rental  from  the  vaults,  boxes  and  places  of  de- 
posit, whereas  it  should  receive  all.  It  may  be  claimed  that  the 
Safe  Deposit  Company  ran  some  risk  in  agreeing  to  pay  $15,000 
per  annum  in  any  event.  Not  so.  It  took  no  chances,  for  the 
net  rents  received  by  it  from  these  vaults,  etc.,  during  the  first 
year  were  $66,474.92,  and  the  lowest  net  rental  since  that 
time  was  $47,414.18.  Besides  the  landlord  paid  all  expenses,  so 
that  there  was  no  chance  to  lose  and  every  chance  to  win,  on 
the  side  of  the  tenant. 

From  the  year  1877  to  1904,  both  inclusive,  the  Mercantile 
Safe  Deposit  Company  paid  to  the  Society  as  rent  the  sum  of 
$1,033,846.46  in  annual  payments  ranging  from  $23,707.09,  the 
lowest,  to  $46,535.04,  the  highest.  The  statements  which  we 
received  from  the  Society  do  not  show  the  payments  made  or  ex- 
penses incurred  for  alterations  in,  and  additions  to,  the  premises 
.occupied  by  the  Mercantile  Safe  Deposit  Company  prior  to  the 
17th  day  of  September,  1890,  but  they  do  show  an  outlay  by  the 
Society  on  the  vaults,  boxes,  rooms,  etc.,  leased  by  this  tenant 
from  September  17,  1890,  to  December  31,  1904,  inclusive,  of 
$479,909.45.  The  rents  received  from  the  Safe  Deposit  Company 
.for  the  same  period  were  $483,372.94,  showing  a  balance  in  favor 
of  the  landlord  of  only  $3,463.49.  But  when  we  take,  into 
account  the  expenses  for  heat,  light,  water,  janitors,  watchmen, 
cleaning,  elevators,  etc.,  it  is  manifest  that  the  Society  suffered 
a  great  loss,  whereas  the  gentlemen  interested  in  the  Safe 
DepOiSit  Company  have  been  reaping  enormous  profits.  The 
capital  stock  of  $300,000  has  been  paying  29  per  cent,  dividends, 
all  at  the  expense  of  the  parent  company;  and  this  will  continue 
for  ninety-six  years  to  come. 

THE  SECURITY  SAFE  DEPOSIT  COMPANY. 

Manifestly,  Henry  B.  Hyde  was  pleased  with  the  safe  deposit 
business  and  concluded  to  extend  and  improve  it.  The  Equitable 
Society,  therefore,  bought  or  erected  a  building  in  Boston,  Mass., 


8 

and  leased  an  adjoining  building  from  one  Charlotte  A.  Johnson 
for  the  use  of  the  Society.  He  and  his  associates  organized  a 
corporation  under  the  laws  of  Massachusetts  and  named  it  the 
"  Equitable  Safe  Deposit  Company,"  and  on  January  1,  1880, 
The  Equitable  Life  Assurance  Society  leased  to  this  company  an 
outfit  of  rooms,  vaults,  boxes,  and  general  accommodations  for 
safe  deposit  business,  partly  in  the  building  which  it  owned  and 
partly  in  the  building  which  it  leased.  This  lease  is  better — 
$16,000  a  year  better — to  the  tenant  than  the  one  to  the  Mercan- 
tile Safe  Deposit  Company.  By  it  the  Safe  Deposit  Company 
rents  out  or  sublets  the  vaults,  safes,  boxes  and  places  of  deposit 
and  pays  all  expenses  incurred  in  the  same.  The  balance  or  net 
rental  is  divided  as  follows :  The  first  $100  go  to  The  Equitable 
Society;  the  next  $16,000  go  to  the  Safe  Deposit  Company;  and 
if  the  net  income  exceeds  $16,100  per  annum,  The  'Equitable 
Society  gets  half  the  surplus  until  one-half  of  such  surplus  to- 
gether with  the  $100  reaches  $20,000,  when  the  rights  of  The 
Equitable  Society  cease,  and  the  tenant  gets  all  the  remainder. 
The  maximum  amount  which  the  Society  can  receive  is  $20,000 
in  any  one  year,  and  when  it  receives  that  amount  the  tenant 
receives  $36,000  and  all  surplus.  The  lease  provides  for  three 
renewals  of  twenty -five  years  each  at  the  option  of  the  lessee, 
which  will  continue  it  in  force  until  the  first  day  of  January, 
1980,  and  then  for  a  renewal  of  one  hundred  years  from  that 
date,  at  the  option  of  the  lessee,  which  will  continue  it  in  force 
until  the  first  day  of  January,  2080.  It  was  executed  on  the  part 
of  the  Society  by  Henry  B.  Hyde,  President,  and  Samuel  Borrowe, 
Secretary.  (See  Exhibit  2,  Addenda.) 

It  seems  that  on  or  before  the  eighth  day  of  November,  1888, 
another  corporation  known  as  "The  Security  Safe  Deposit  Com- 
pany," was  organized  under  the  laws  of  the  State  of  Massachusetts 
which  succeeded  to  the  rights  of  the  Equitable  Safe  Deposit  Com- 
pany, and  that  the  Equitable  Society  had  constructed  a  new  build- 
ing in  the  City  of  Boston.  Therefore  on  the  eighth  day  of  Novem- 
ber, 1888,  the  Society  entered  into  a  new  lease  of  the  basement 
and  ground  floor  of  the  new  building  in  addition  to  the  space 


9 

already  occupied  by  the  Equitable  Safe  Deposit  Company.  The 
Equitable  Society  simply  added  the  ground  floor  and  basement  to 
the  space  occupied  under  the  old  lease,  without  receiving  or 
apparently  asking  any  additional  rent  or  compensation.  This 
lease  was  executed  on  the  part  of  the  Society  by  James  W.  Alex- 
ander, President,  and  William  Alexander,  Vice-President.  (See 
Exhibit  3,  Addenda.) 

Again  on  the  twentieth  day  of  December,  1904,  the  Society  by 
a  supplemental  lease  added  some  new  space  and  accommodations 
to  the  rooms  and  space  occupied  by  the  lessee  without  any  addi- 
tional rent  or  compensation,  and  this  instrument  was  executed 
on  the  part  of  the  Society  by  James  W.  Alexander,  Vice-President, 
and  William  Alexander,  Secretary. 

No  one  would  anticipate  that  such  an  arrangement  would 
prove  profitable  to  the  Society,  and  the  expected  has  happened. 
According  to  a  statement  furnished  us  by  the  officers  of  the 
Society,  the  receipts  of  rent  from  the  Equitable  Safe  Deposit 
Company  and  the  Security  Safe  Deposit  Company,  its  successor, 
from  the  year  1878  to  the  year  1904,  both  inclusive,  amounted 
to  |168,285.26.  This  statement  contains  no  items  of  expendi- 
ture prior  to  the  ninth  day  of  January,  1891;  but  the  expendi- 
tures and  payments  made  by  the  Society  on  account  of  altera- 
tions and  additions  in  and  for  the  Security  Safe  Deposit  Company 
from  that  date  to  and  including  the  sixteenth  day  of  May,  1904, 
was  1162,045.96,  very  much  more  than  the  rent  received  during 
that  period.  The  Safe  Deposit  Company  has  received  $168,- 
285.26,  the  same  as  the  Equitable  Society,  and  the  additional 
sum  of  |16?000  a  year  since  January  1,  1880,  amounting  to  $300,- 
000,  or  a  total  of  $468,285.26,  while  the  Equitable  Society  has 
paid  out  many  thousands  of  dollars  for  additions  and  improve- 
ments in  these  vaults,  safes,  places  of  deposit,  more  than  it  has 
received,  and  has  also  incurred  all  expense  for  light,  heat,  water, 
elevator,  janitors,  watchmen,  cleaning,  etc.  With  this  sort  of 
a  "  jug-handled  "  lease  it  is  not  surprising  that  the  real  estate 
pays  the  Society  only  1.58  per  cent,  on  the  whole  building,  while 
the  stock  of  the  Security  Safe  Deposit  Company  pays  its 
owners  18  per  cent,  on  its  capitalization  of  $200,000. 


10 

"  THE  MISSOURI  SAFE  DEPOSIT  COMPANY." 

The  late  Henry  B.  Hyde,  who  by  this  time  had  become  a  firm 
believer,  and  an  expert,  in  safe  deposit  business,  concluded  he 
could  improve  on  the  Boston  lease  by  f 4,000  a  year  in  favor  of 
himself  and  his  friends,  and  to  the  loss  of  the  Society.  There- 
fore, prior  to  the  ninth  day  of  November,  1888,  he  caused  The 
Equitable  Society  to  purchase  an  office  building  in  the  City  of 
St.  Louis,  Missouri,  and  organized  a  corporation  under  the  laws  of 
that  State,  and  named  it  "  The  Missouri  Safe  Deposit  Company," 
and  on  the  ninth  day  of  November,  1888,  he  caused  The  Equita- 
ble Society  to  make  a  lease  to  this  corporation.  This  lease  was 
executed  by  James  W.  Alexander,  President,,  and  William  Alex- 
ander, Secretary.  (See  Exhibit "4,  Addenda.) 

By  this  lease  the  Missouri  Safe  Deposit  Company  rents  out  or" 
sub-lets  the  vaults,  safes,  boxes  and  places  of  deposit,  and  pays 
all  expenses  incurred  in  the  same.  The  balance  or  net  rental  is 
disposed  of  as  follows :  The  first  flOO  go  to  the  Equitable  Society, 
the  next  |20,000  go  to  the  Safe  Deposit  Company,  and  if  the  net 
income  exceed  $20,100  per  annum,  one-half  of  such  excess  goes  to 
the  Equitable  Society  and  one-half  to  the  Safe  Deposit  Company, 
until  such  one-half,  together  with  the  f  100  amounts  to  $20,000, 
which  is  the  maximum  rent  which  the  Equitable  Society  can  re- 
ceive, and  all  excess  above  that  goes  to  the  Safe  Deposit  Company. 
Let  it  be  understood  that  the  Society  receives  nothing  under  this 
lease  except  $100  a  year  until  after  the  Safe  Deposit  Company  has 
received  f 20,000  per  annum,  above  all  expenses,  while  the  Society 
keeps  up  all  additions  and  improvements  at  its  own  expense. 
Thereafter  and  on  December  20,  1894,  The  Equitable  Society 
leased  to  this  Safe  Deposit  Company  two  additional  rooms  with- 
out any  additional  rent.  (See  Exhibit  5,  Addenda.) 

Under  this  lease  the  Society  received  in  rents  from  1880  to  1894, 
for  these  premises,  which  were  worth  many  thousands  of  dollars 
annually,  the  magnificent  sum  of  $100  dollars  a  year,  and  from 
1895  to  1904  it  received  $300  a  year.  There  is  no  apparent  reason 
why  the  rent  was  jumped  from  one  to  three  hundred  dollars  at 


11 

once,  except  possibly  to  give  these  gentlemen  an  opportunity,  in 
case  of  a  superficial  inquiry,  to  say  that  the  rent  was  increased 
200  per  cent. 

From  1886  to  1904,  inclusive,  the  Society  received  the  total 
rental  of  |3,900,  while  from  the  16th  day  of  February,  1891,  to 
the  9th  day  of  May,  1905,  inclusive,  it  paid  out  on  account  of 
alterations,  additions,  repairs,  etc.,  for  these  premises  occupied 
by  this  Safe  Deposit  Company  the  sum  of  f  33,131.40,  and  im  addi- 
tion thereto,  during  the  whole  term  of  the  lease,  the  Society 
incurred  the  expense  of  heat,  light,  water,  janitors,  watchmen, 
elevators  and  cleaning.  The  amount  expended  by  the  Society 
on  these  leased  premises  prior  to  February  16,  1901,  does  not 
aippear.  The  Society  has  realized  only  1.86  per  cent,  on  its  valua- 
tion of  this  building  (much  less  than  the  investment),  while  the 
tenant  had  its  premises  practically  rent  free,  and  received  very 
large  profits  from  the  time  of  its  organization!  until  the  stock  of 
the  Missouri  Safe  Deposit  Company  was  sold  to  the  Society  in  the 
year  1902. 

The  leases  by  the  Equitable  Society  to  these  three  safe  deposit 
companies  are  very  much  alike.  They  all  contain  provisions  with 
reference  to  arbitration  in  case  of  a  disagreement  between  the 
parties  as  to  the  expenditure's  of  the  lessee.  Three  arbitrators 
are  to  be  chosen,  one  by  the  lessee,  one  by  the  lessor  and  the  third 
by  the  two  so  chosen,  and  the  decision  of  such  arbitrators  shall 
be  final  and  conclusive  upon  the  parties.  When  it  is  clearly 
understood  that  the  gentlemen  who  caused  the  Society  to  make 
these  long  leases  at  great  loss  to  the  Society  are  the  same  men 
who  reap  the  profits  from  the  leases,  it  is  manifest  that  if  ever  an 
arbitration  question  should  come  up  as  a  matter  of  form,  the 
Society's  interests  would  not  be  looked  after.  That  is  all  that 
need  be  said. 

These  leases  are  all  so  one-sided,  unfair  and  unjust  to  the 
Society  that  it  is  practically  impossible  to  convey  a  clear  idea  of 
all  their  provision's  by  any  extract  which  may  be  made ;  for  it  is 
difficult  to  believe  that  trustees  of  a  sacred  trust  would  make  such 
contracts  against  the  welfare  of  the  Society  and  in  their  own 


12 

interests.  In  order  that  the  policyholders  may  read  for  them- 
selves, if  they  desire,  and  see  the  kind  of  leases  which  the  Society 
has  been  making,  copies  of  them  are  appended  to  and  made  a  part 
of  this  report. 

(See  Exhibits  1  to  5,  Addenda.) 

But  who  were  the  gentlemen  who  realized  these  profits?  The 
Missouri  Safe  Deposit  Company  was  capitalized  at  f 200,000,  con- 
sisting of  2,000  shares  of  $100  each,  and  the  following  is  a  list  of 
the  original  subscribers  to  that  stock  and  the  amounts  of  their 
subscriptions : 

Shares. 

Henry  G.  Marquamd 200 

Henry  G.  Haarstick 5 

D.  K.  Ferguson 5 

George  W.  Allen 5 

George  D.  Capen 5 

William  Nichols 5 

James  Jauneey  Hoyt 5 

William  Alexander 25 

Louis  Fitzgerald 1,745 


2,000 


Two  hundred  shares  appear  in  the  name  of  Henry  G.  Marquand. 

The  six  following  seem  to  be  qualified  directors  holding  five 
shares  each.  William  Alexander,  the  Secretary  of  the  Equitable 
Society,  took  25  shares,  and  Louis  Fitzgerald  took  the  great  bulk 
of  the  stock,  1,745  shares.  This  gentleman  was  the  intimate 
friend  of  the  late  Henry  B.  Hyde  and  for  many  years  was  Chair- 
man of  the  Executive  and  Finance  Committees  of  the  Equitable 
Society.  We  have  sent  for  Mr.  Fitzgerald  to  tell  us  who  the 
real  owner  of  this  stock  was,  but  he  has  not  appeared.  It  may 
be  assumed  that  most  of  it  was  owned  by  Henry  B.  Hyde  him- 
self, for  while  he  favored  his  intimate  friends  on  the  inside  at 
the  expense  of  the  Society  he  kept  the  lion's  share  himself. 


13 

President  James  W.  Alexander  and  other  officers  who  appeared 
before  us  explained  that  in  the  year  1902  the  Society  was  negoti- 
ating the  sale  of  this  St.  Louis  building,  but  that  the  proposed 
purchaser  refused  to  take  it  on  account  of  this  long  and  one-sided 
lease.  It  was  on  that  account  deemed  wise  on  the  part  of  the 
Society  to  purchase  all  the  stock  of  the  company  so  that  it  might 
own  both  the  building  and  the  stock  and  terminate  the  lease  at 
will.  It  was  therefore  agreed  upon  to  pay  the  stockholders  |250 
per  share  which  was  estimated  on  a  basis  of  four  per  cent.  The 
stock  was  paying  dividends  of  ten  per  cent,  per  annum.  All  of 
the  stock  was  bought  in  by  the  (Society  at  that  figure.  James 
H.  Hyde  was  the  owner  of  a  large  majority,  for  on  June  2,  1902, 
he  sold  to  the  Society  1,410  shares  at  $250  a  share  and  received 
in  cash  $352,500. 

James  W.  Alexander  .says  he  signed  these  leases  under  the 
direction  of  Henry  B.  Hyde.  I  believe  that  to  be  the  fact,  and 
it  is  the  most  charitable  construction  which  can  be  placed  upon 
his  acts. 

The  following  statement  submitted  to  us  by  the  officers  of  the 
Society  is  here  inserted.  It  tells  the  story  how  the  officers  of  the 
Society  profited  through  these  safe  deposit  companies. 

Rents  Received  from  Mercantile  Safe  Deposit  Co.  of  New  York,  Security  Safe  Deposit 
Co.  of  Boston,  Mass.,  Missouri  Safe  Deposit  Co.  of  St.  Louis,  Mo. 


1876 

Mercantile  Safe 
Deposit  Co. 

Security  Safe  Missouri  Safe 
Deposit  Co.    Deposit  Co. 

1877   

$33,237  46 

1878  

23,707  09 

$1,787  63 

1879  

32,065  72 

1880 

34  079  69 

100  00 
100  00 
145  38 
836  38 
1,693  20 
2,415  87 
4,046  84 
5,296  69 
6,526  16 
7,698  56 
8,744  56 
5,619  14 
5,941  30 
7,137  28 

1881 

42  208  33 

1882 

43,321  71 

1883   .    .  . 

46  535  04 

1884  

45,206  23 

1885  , 

45,706  81 

1886  

45,851  48 

$100  00 
100  00 
100  00 
100  00 
100  00 
100  00 
100  00 
100  00 

1887  

,  43,066  51 

1888  

,  41,042  22 

1889 

42,111  03 

1890      .  . 

41,910  45 

1891  , 

;  .  .  .     44,493  11 

1892  

,  32,695  71 

1893.. 

.  '    34,989  30 

14 


1894. 
1895. 
1896. 
1897. 
1898. 
1899. 
1900. 
1901. 
1902. 
1903. 
1904. 


Mercantile  Safe  Security  Safe     Missouri  Safe 

Deposit  Co.  Deposit  Co.  Deposit  Co. 

$34,447  65  $6,095  69  $100  00 

29,815  08  5,858  96  300  00 

32,021  52  7,257  31  300  00 

32,645  39  8,805  89  300  00 

28,189  06  9,390  75  300  00 

38,197  06  10,469  57  300  00 

36,439  29  11,029  45  300  00 

37,083  12  11,530  56  300  00 

38,954  01  12,993  00  300  00 

29,966  81  12,418  11  300  00 

23,879  57  14,346  98  300  00 

$1,033,846  46  $168,285  26  $3,900  00 


Payments  Made  on  Account  of  Alterations  and  Additions,  Mercantile  Safe  Deposit  Co. 

of  New  York. 
New  North  Vault: 

J.  B.  &  J.  M.  Cornell,  18th  and  final  payment,  Feb.  15,  1905 $500  00 

J.  B.  &  J.  M.  Cornell,  17th  payment,  April  27,  1904 5,000  00 

J.  B.  &  J.  M.  Cornell,  16th  payment,  March  7,  1904 7,500  00 

J.  B.  &  J.  M.  Cornell,  15th  payment,  Jan.  21,  1904 10,000  00 

J.  B.  &  J.  M.  Cornell,  14th  payment,  Dec.  16,  1903 15,868  63 

J.  B.  &  J.  M.  Cornell,  13th  payment,  Sept.  18,  1903 5,968  80 

J.  B.  &  J.  M.  Cornell,  12th  payment,  July  27,  1903 5,874  52 

J.  B.  &  J.  M.  Cornell,  llth  payment,  July  1,  1903 5,367  10 

J.  B.  &  J.  M.  Cornell,  vault  work,  10th  payment,  May  8,  1903 7,220  60 

J.  B.  &  J.  M.  Cornell,  vault  work,  9th  payment,  April  8,  1903 7,309  05 

J.  B.  &  J.  M.  Cornell,  vault  work,  8th  payment,  March  27,  1903 10,000  00 

J.  B.  &  J.  M.  Cornell,  vault  work,  7th  payment,  Feb.  20,  1903 8,710  65 

J.  B.  &  J.  M.  Cornell,  vault  work,  6th  payment,  Jan.  14,  1903 8,043  90 

J.  B.  &  J.  M.  Cornell,  vault  work,  5th  payment,  Dec.  10,  1902 7,311  00 

J.  B.  &  J.  M.  Cornell,  vault  work,  4th  payment,  Nov.  12,  1902 14,013  69 

J.  B.  &  J.  M.  Cornell,  vault  work,  3d  payment,  Oct.  15,   1902 22,020  28 

J.  B.  &  J.  M.  Cornell,  vault  work,  2d  payment,  Sept.  4,  1902. 45,031  49 

J.  B.  &  J.  M.  Cornell,  vault  work,  1st  payment,  Aug.  20,  190£ 13,060  20 

$108,800  00 

J.  M.  Mossman,  4th  and  final  payment,  Oct.  26,  1904 $3,232  78 

J.  M.  Mossman,  3d  payment,  Sept.  15,  1904 52,500  00 

J.  M.  Mossman,  safe  deposit  boxes,  tin  boxes  and  locks,  2d  payment, 

May  13,  1904 9,678  45 

J.  M.  Mossman,  safe  deposit  boxes,  tin  boxes  and  locks,  1st  payment, 

March  25,  1904 -40,000  00 

$105,411   23 

J.  B.  &  J.  M.  Cornell,  iron  shutters.  March  7,  1904 $490  00 

J.  B.  &  J.  M.  Cornell,  steel  plates,  etc.,  Feb.  15,  1905 183  50 

J.  B.  &  J.  M.  Cornell,  in  addition  to  contract,  iron  lintels,  etc.,  Feb.  15, 

1905 88  40 

J.  B.  &  J.  M.  Cornell,  in  addition  to  contract,  bronze  ceiling,  Feb.  15, 

1905 3,601  24 

J.  B.  &  J.  M.  Cornell,  in  addition  to  contract,  dragon  sign,  Feb.  15, 

1905 450  00 


$4,813  14 


15 


J. 

J. 
J. 
J. 
J. 

New  Vaults  Nos.  1,  2,  3: 
B.  &  J.  M.  Cornell,  5th  and  final  payment,  Dec.  4,  1903  
B.  &  J.  M.  Cornell,  4th  payment,  July  27,  1903  
B.  &  J.  M.  Cornell,  vault  work,  3d  payment,  June  10,  1903  
B.  &  J.  M.  Cornell,  vault  work,  2d  payment,  May  8,  1903  
B.  &  J.  M.  Cornell,  vault  work,  1st  payment,  April  8,  1903  

$2,017  24 
4,703   10 
.     '       5,048  40 
3,873   90 
12,022  36 

$28,565  00 

Payments  Made  on  Account  of  Alterations  and)  Additions, 

Mercantile  Safe  Deposit 

Company  of  New  fork. 

J. 

B.  &  J.  M.  Cornell,  iron  work  

$2,284 

81, 

paid 

Oct. 

8, 

1890 

J. 

B.  &  J.  M.  Cornell,  vault  work  

25,000 

00, 

paid 

Nov. 

IT, 

1890 

J. 

B.  &  J.  M.  Cornell,  vault  work  , 

25,000 

00, 

paid 

July 

8, 

1891 

J. 

20,000 

00, 

paid 

Sep. 

1, 

1891 

J. 

B.  &  J.  M.  Cornell,  safe  deposit  boxes  

13,132 

38, 

paid 

Feb. 

12, 

1892 

J. 

B.  &  J.  M.  Cornell,  guards  , 

945 

00, 

paid 

Jan. 

23, 

1895 

J. 

B.  &  J.  M.  Cornell,  safe  deposit  boxes.  .-.  ...  , 

1,148 

00, 

paid 

Sep. 

25, 

1897 

J. 

B.  &  J.  M.  Cornell,  iron  grilles  , 

349 

00, 

paid 

May 

31, 

1899 

J. 

B.  &  J.  M.  Cornell,  2  safes  

640 

00, 

paid 

June 

20, 

1900 

J. 

M.  Mossman,  time  lock,  vault  V  

275 

00, 

paid 

Feb. 

26, 

1890 

J. 

M.  Mossman,  combination  locks  , 

300 

00, 

paid 

July 

2, 

1890 

J. 

M.  Mossman,  door  guards  

135 

00, 

paid 

Sep. 

17, 

1890 

J. 

M.  Mossman,  5  safes  

1,960 

00, 

paid 

June 

27, 

1891 

J. 

M.  Mossman,  safe  deposit  locks  , 

7,800 

00, 

paid 

Sep. 

1, 

1891 

J. 

M.  Mossman,  refinishing  

2,330 

22, 

paid 

Dec. 

22, 

1891 

J. 

M.  Mossman,  door  and  vestibule  

2,005 

20, 

paid 

Jan. 

8, 

1892 

J. 

M.  Mossman,  safe  deposit  boxes  

2,403 

90, 

paid 

Feb. 

12, 

1892 

J. 

M.  Mossman,  license  for  2  sills  , 

200 

00, 

paid 

Aug. 

17 

1S92 

J. 

M.  Mossman,  door  and  vestibule  , 

525 

00, 

paid 

May 

25, 

1802 

J. 

M.  Mossman,  iron  closets  , 

225 

00, 

paid 

May 

17, 

1893 

J. 

1,095 

27, 

paid 

Feb. 

28, 

1894 

J. 

M.  Mossman,  safe  deposit  boxes  

3,813 

25, 

paid 

Aug. 

29, 

1895 

J. 

M.  Mossman,  number  plates  

500 

00, 

paid 

Aug. 

29, 

1895 

J. 

M.  Mossman,  safe  deposit  locks  

2,220 

80, 

paid 

Aug. 

29, 

1895 

J. 

M.  Mossman,  safe  deposit  boxes  

.,.          1,891 

00, 

paid 

Nov. 

11, 

1896 

J. 

M.  Mossman,  safe  deposit  locks.  .......... 

208 

00, 

paid 

Nov. 

11, 

1896 

J. 

M.  Mossman,  safe  deposit  locks  

....          1,263 

30, 

paid 

Sep. 

1, 

1897 

J. 

M.  Mossman,  safe  deposit  boxes  

4,196 

35, 

paid 

Sep. 

13, 

1899 

J. 

M.  Mossman,  safe  deposit  boxes  

3,054 

19, 

paid 

Aug. 

15, 

1900 

J. 

M.  Mossman,  safe  deposit  boxes  

2,468 

79, 

paid 

Aug. 

15, 

1900 

J. 

M.  Mossman,  safe  deposit  boxes  

585 

40, 

paid 

Aug. 

15, 

1900 

J. 

M.  Mossman,  time  locks  

650 

65, 

paid 

April 

25, 

1900 

.1. 

M.  Mossman,  safe  deposit  locks  

360 

00, 

paid' 

April 

23, 

1902 

J. 

M.  Mossman,  safe  deposit  locks  

282 

65, 

paid 

April 

23, 

1902 

J. 

M.  Mossman,  safe  deposit  boxes  

2,937 

95, 

paid 

April 

23, 

1902 

J. 

M.  Mossman,  safe  deposit  locks  , 

104 

40, 

paid 

Mar. 

18, 

1902 

J. 

M.  Mossman,  safe  deposit  locks  

.  .  .  .             423 

40, 

paid 

May 

20, 

1903 

J. 

2,578 

25, 

paid 

Oct. 

11, 

1899 

J. 

M.  Mossman,  safe  deposit  locks  

358 

50, 

paid 

Aug. 

17, 

1904 

II. 

Hildebrand,  cabinet  work  

398 

80, 

paid 

Dec. 

19, 

1890 

u. 

Hildebrand,  cabinet  work  

480 

50, 

paid 

Dec. 

19, 

1890 

R. 

Hildebrand,  cabinet  work  

341 

65, 

paid 

Jan. 

13, 

1891 

B. 

Hildebrand,  cabinet  work  , 

652 

42, 

paid 

Mar. 

9, 

1891 

R. 

Hildebrand,  cabinet  work  

2,974 

17, 

paid 

Oct. 

24, 

1891 

Chas.   Wolff,  pneumatic   tubes  

500 

00, 

paid 

Nov. 

9, 

1891 

P. 

Graves,  ventilating  work  

2,230 

02, 

paid 

Aug. 

17, 

1892 

R. 

J.  Clash,  lining  vault  

670 

00, 

paid 

May 

12, 

1893 

F. 

Beck  &  Co.,  decorating  

3,320 

00, 

paid 

May 

24, 

1893 

J. 

Williams,  bronze  sign  

325 

00, 

paid 

Nov. 

29, 

1899 

$147,543  22 

E.  &  O.  E.,  May  31,  1905. 

1C 

Payments  Made  on  Account  of  Alterations  and  Additions,  Security  Safe  Deposit 
Company  of  Boston,  Mass. 

JR.   Hildebrand,  cabinet  work $2,500  00,  paid  April    6,  1891 

R.  Hildebrand,  cabinet  work 2,000  00,  paid  May   12,  1891 

R.  Hildebrand,  cabinet  work 1,733  01,  paid  July      8,  1891 

J.  M.  Mossman,  safe  deposit  boxes 1,012  20,  paid  Jan.      9,  1891 

J.  M.  Mossman,  safe  deposit  boxes 3,618  00,  paid  Mar.  21,  1900 

Smith  &  Lovett,  iron  work. 1,761  96,  paid  Jan.    29,  1891 

Smith  &  Lovett,  iron  work 2.113  17,  paid  April  10,  1891 

Smith  &  Lovett,  gratings  and  steel  door 350  00,  paid  Sep.    21,  1891 

Batterson  &  Eisle,  marble  work 2,500  00,  paid  April  13,  1891 

Batterson-  &  Eisle,  marble  work 882  04,  paid  July      9,  1891 

Batterson  &  Eisle,  marble  work 3,033  00,  paid  Oct.    31,  1894 

G.  H.  Pride,  burglar  alarm 1,250  00,  paid  July   21,  1891 

J.  B.  &  J.  M.  Cornell,  safe  deposit  boxes 4,800  00,  paid  Feb.    12,  1892 

J.  B.  &  J.  M.  Cornell,  new  vault 50,000  00,  paid  July   27,  1894 

J.  B.  &  J.  M.  Cornell,  new  vault 36,134  28,  paid  Oct.   25,  1894 

J.  P.  Gushing  Co.,  burglar  alarms 1,219  45,  paid  July    14,  1892 

J.  P.  Gushing  Co.,  electrical  work 981  89,  paid  Jan.      7,  1893 

Damon  Safe  and  Iron  Co.,  safe  deposit  boxes 4,541  00,  paid  June     2,  1893 

Damon  Safe  and  Iron  Co.,  safe  deposit  boxes 4,000  00,  paid  Nov.  21,  1894 

Damon  Safe  and  Iron  Co.,  safe  deposit  boxes 3,500  00,  paid  Jan.      9,  1895 

Cottier  &  Co.,  decorating 2,500  00,  paid  Oct.    26,  1894 

Cottier  &  Co.,  decorating 2,500  00,  paid  Nov.  23,  1894 

Cottier  &  Co.,  decorating. 2,605  00,  paid  Dec.    20,  1894 

J.  P.  Perry,  electrical  supplies 1,046  26,  paid  Jan.    22,  1895 

Poulsen  &  Eger,  tablet 365  00,  paid  Jan.    23,  1895 

Andrews,  Jaques  &  R.,  commission 2,061  53,  paid  Jan.    30,  1895 

L.  D.  Willcutt  &  Son 15,999  62,  paid  Jan.    30,  1895 

J.  B.  Cashman,  plans  and  details 1,000  00,  paid  Jan.      8,  1895 

Mosler  Safe  Co.,  vault  doors  and  boxes 3,025  55,  paid  Oct.    15,  1902 

Mosler  Safe  Co.,  vault  doors 1,815  00,  paid  Aug.    19,  1903 

Mosler  Safe  Co.,  safe  deposit  boxes 460  00,  paid  May   16,  1904 

Mosler  Safe  Co.,  vault  front 738  00,  paid  May   16,  1904 


$162,045  96 
K.  &  O.  E. 

'    Missouri  Safe  Deposit  Company  of  St.  Louis,  Mo. 

J.  M.  Mossman,  safe  deposit  locks $4,725  00,  paid  Feb.  16,  1891 

J.  M.  Mossman,  locks  and  keys 627  55,  paid  Aug.  12,  1897 

J.  M.  Mossman,  safe  deposit  boxes. 1,100  00,  paid  Dec.  .  1,  1898 

J.  M.  Mossman,  safe  deposit  boxes 1,687  45,  paid  July  18,  1900 

Thayer  &  Robinson,  commission 561  75,  paid  May  21,  1891 

Herring  &  Co.,  safe  deposit  boxes 14,000  00,  paid  May  7,  1891 

St.  Louis  Stamping  Co.,  safe  boxes 2,080  00,  paid  July  8,  1891 

St.  Louis  Art  Metal  Co.,  metal  cabinets 1,317  67,  paid  July  27,  1899 

Library  Bureau,  oak  cabinet 83  00,  paid  July  27,  1899 

J.  M.  Mossman,  safe  deposit  boxes 2,493  00,  paid  Sep.  23,  1903 

Alterations    4,655  98,  paid  May  9,  1905 


$33,331  40 
E.  &  O.  E.,  May  31,  1905. 


17  -,„..,.. 

COMMERCIAL  TRUST  COMPANY  OF  PHILADELPHIA. 
The  Commercial  Trust  Company  of  Philadelphia  is  advertised 
in  a  book  published  by  The  Equitable  Society  annually,  as  one 
of  its  affiliated  companies.  Many  of  its  directors  are  Equitable 
people.  Many  years  ago  the  custom  or  practice  began  of  making 
advances  by  the  Society  to  its  agents.  In  about  the  year  1893  the 
total  of  these  advances  was  large  and  appeared  as  an  asset  in  the 
annual  report  of  the  Society,  but  was  not  admitted  as  an  asset  by 
the  Insurance  Department  of  the  State  of  New  York.  It  therefore 
occurred  to  Henry  B.  Hyde  to  get  a  financial  institution  which 
would  answer  a  double  purpose,  and  this  Commercial  Trust  Com- 
pany of  Philadelphia  was  either  organized  or  purchased.  Since 
that  time,  annually,  large  sums  of  agents'  advances  have  been  as- 
signed to  this  Trust  Company.  Credit  has  been  given  The  Equit- 
able Society  in  the  Trust  Company's  books,  as  so  much  cash  depos- 
ited, and  has  been  admitted  as  an  asset  by  the  Insurance  Depart- 
ment. The  other  purpose  which  it  serves  is  to  make  a  profit  for 
the  Trust  Company,  in  which  many  Equitable  officers  and  direc- 
tors are  interested  as  stockholders,  and  at  the  loss  of  The  Equit- 
able Society.  On  the  twelfth  day  of  December,  1904,  The  Equit- 
able Society  assigned  to  the  Commercial  Trust  Company  agents' 
balances  to  the  amount  of  $4,273,249.45  by  an  assignment  and 
agreement.  This  instrument,  on  its  face,  is  an  absolute  assign- 
ment of  all  claims  which  go  to  make  up  the  total,  and  contains 
the  following  covenants :  "  The  said  Society  does  hereby  further, 
for  the  consideration  aforesaid,  warrant  and  guarantee  to  the 
said  Commercial  Trust  Company  that  the  several  amounts  ad- 
vanced to  the  several  individuals  and  copartnerships,  as  stated 
in  said  Schedule  A,  are  justly  due  and  owing  to  said  Society 
from  the  said  debtors  named  in  Schedule  A,  together  with  inter- 
est thereon  at  the  rate  of  five  per  cent  per  annum,  and  that  said 
Society  has  a  legal  and  valid  claim  against  each  and  every  of 
said  debtors  for  the  several  amounts  specified  in  said  schedule, 
with  interest  thereon;  that  said  advances  arise  upon  contract  or 
contracts  between  the  said  Society  and  the  said  debtors  and  con- 
sist of  advances  made  by  said  Society  upon  the  contract  rights 
of  said  several  debtors  to  commissions  on  the  renewal  premiums 


18 

on  policies  in  said  Society,  and  that  such  liens  are  duly  evidenced 
by  documents  now  in  the  possession  of  said  Society.  And  the 
said  Society  further  warrants  and  guarantees  that  the  present 
value  of  said  rights  under  said  annual  renewal  commissions  of 
said  debtors,  set  forth  in  said  schedule,  computed  at  five  times 
(or  a  lesser  number  of  times,  as  indicated  in  the  margin  of  said 
schedule),  is  equal  to  at  least  the  amount  of  such  advances  as 
set  forth  in  Schedule  A." 

On  the  same  day,  December  12,  1904,  by  an  assignment  and 
agreement   of  exactly  the   same  form,  The   Equitable  Society 
transferred  to  the  the  Equitable  Trust  Company  of  New  York 
another  schedule  of  agents7  balances  amounting  to  f  1,539,935.42. 
Mr.  Clarence  L.  Gillespie,  Vice  President  of  this  Trust  Company, 
was  called  as  a  witness  and  stated,  in  substance,  that  the  assign- 
ment and  agreement  together  with  the  schedule  was  the  only 
paper  delivered  by  the  Society  to  the  Trust  Company.    That  none 
of  the  notes  or  other  evidences  of  debt  held  by  the  Society 
against  the  agents  were  delivered  with  the  assignment.     That 
the  Trust  Company  simply  took  this  instrument  and  entered  it 
on  its  books  as  a  loan  to  The  Equitable  Society.     The  Equitable 
Society  retains  all  the  evidences  of  claims  against  the  individual 
agents  to  whom  advances  are  made,  collects  them  all  and  pays 
them  over  to  the  trust  companies.     This  practice  has  been  in 
vogue  with  the  Commercial  Trust  Company  since  about  the  year 
1894,  and  the  Trust  companies  never  suffered  any  loss.     In  fact 
these  trust  companies  run  no  risk,  and  they  have  no  trouble  or 
expense -in  connection  with  the  same.     They  simply  enter  the 
total  amounts  in  their  books  as  loans  to  The  Equitable  Society, 
on  which  they  get  five  per  cent.;  and  the  Commercial  Trust  Com- 
pany pays  The  Equitable  Society  3  per  cent,  on  its  deposits,  and 
the  Equitable  Trust  Company  only  pays  2  per  cent,  on  its  depos- 
its.    Tf  The  Equitable  Society  had  not  made  these  assignments 
its  total  assets  would  appear  to  be  $5,813,184.87  less.       If  it  had  re- 
tained these  accounts  it  would  have  saved  in  the  transaction 
with  the  Commercial  Trust  Company,  2  per  cent,  on  $4,273,249.45, 
or  $85,464.98,  and  it  would  have  saved  in  the  transaction  with 
the  Equitable  Trust  Company,  3  per  cent,  on  $1,539,935.42,  or 


19 

$46,198.06.  No  reason  appears  why  it  should  not  have  done  so, 
for  its  bank  cash  deposits  for  a  long  time  back  have  averaged 
between  twenty  and  thirty  millions  of  dollars.  It  is  only  fair 
to  say,  however,  that  The  Equitable  Society  is  a  stockholder  in 
the  Commercial  Trust  Company  in  the  sum  of  about  $347,500,  par 
value,  and  gets  its  share  of  the  profits  in  the  form  of  dividends. 
It  is  also  a  stockholder  in  the  Equitable  Trust  Company  in  the 
sum  of  about  $1,300,000,  par  value,  and  gets  its  share  of  the 
profits  realized  by  that  company  from  this  transaction  in  the 
form  of  dividends;  and  it  is  only  fair  to  say  also,  that  James  H. 
Hyde  is  an  officer  of  the  Commercial  Trust  Company  at  $2,500 
a  year  and  a  stockholder  in  the  sum  of  $25,000  par  value,  and 
he  is  also  Vice  President  of  the  Equitable  Trust  Company  at 
$12,000  a  year  and  a  stockholder  in  the  sum  of  $300,000,  par 
value.  He  therefore  has  a  strong  interest  in  seeing  to  it  that 
these  trust  companies  run  no  risk  and  reap  good  profits. 

THE  EQUITABLE  TRUST  COMPANY  OP  NEW  YORK. 

An  inquiry  was  made  in  relation  to  the  organization  of  The 
Equitable  Trust  Company  of  New  York,  one  of  the  affiliated  com- 
panies of  the  Equitable  Society.  The  name  of  the  original  cor- 
poration was  "American  Deposit  and  Loan  Company,"  which  was 
organized  for  the  purpose  of  loaning  money  to  policyholders  on 
Equitable  policies.  On  the  1st  day  of  June,  1896,  the  stock  list 
of  this  company  according  to  the  statement  verified  by  Mr.  Krech, 
President  of  the  Equitable  Trust  Company,  was  as  follows : 

Shares. 

W.  H.  Coler,  Jr 10 

W.  T.  Hatch 10 

Marcellus  Hartley  4,940 

George  W.  Hebard 10 

G.  W.  Jenkins . .  y V' 10 

John  E.  Searles. .  .^ 10 

George  Westinghouse 10 

5,000 


20 

Maroellus  Hartley  was  a  personal  friend  of  Henry  B.  Hyde,  a 
director  of  the  Society  and  a  member  of  the  Executive  Committee. 

The  4,940  shares  were  supposedly  put  in  his  name  for  the  purpose 
of  distribution,  and  when  that  was  accomplished  the  stockholders 
of  record  were  as  follows : 

Shares. 

James  W.  Alexander 100 

William  Alexander  50 

H.  M.  Alexander. 10 

C.  B.  Alexander 100 

Alexander  &  Colby 180 

Bainbridge  Colby 10 

W.  N.  Coler,  Jr 25 

T.  DeWitt  Cuyler 200 

C.  M.  Depew 200 

Equitable  Life  Assurance  Society 2,335 

Louis  Fitzgerald 100 

Marcellus  Hartley  250 

G.  D.  Hartley 100 

J.  H.  Hyde 300 

Annie  F.  Hyde 50 

G.  W.  Jenkins 100 

T.  D.  Jordan 100 

S.  S.  McCurdy 5 

W.  H.  Mclntyre 100 

Mercantile  Trust  Company 200 

M.  B.  Metcalf 50 

M.  Murray 10 

William  R.  Porter 25 

S.  D.  Ripley 100 

V.  P.  Snyder 50 

George  H.  Squire 50 

G.  E.  Tarbell 100 

George  T.  Wilson 100 


Total 5,000 


21 

The  list  of  stockholders  as  of  January  7,  1902,  was  the  same  as 
the  foregoing.  In  order  to  get  a  clear  understanding  of  this 
transaction  it  should  be  observed  that  nearly  all  of  this  stock 
appears  in  the  name  of  the  Equitable  Society  and  its  directors, 
especially  the  members  of  the  Executive  Committee.  It  was  an 
affiliated  or  subsidiary  company  of  the  Equitable  Society,  and 
was  made  one  of  its  depositories.  On  January  7,  1902,  the  in- 
crease of  its  capital  stock  from  $500,000  to  $1,000,000  was  author- 
ized. The  book  value  of  the  stock  at  the  time  this  increase  was 
authorized  was  $150  per  share.  The  terms  of  the  increase  were 
that  it  was  to  be  paid  for  at  the  rate  of  $150  per  share  and  each 
stockholder  of  record  was  entitled  to  subscribe  for  one  additional 
share  for  each  share  of  his  holdings. 

It  should  be  noted  that  the  Equitable  Society,  which  was  en- 
titled to  take  2,335  shares  on  this  increase,  elected  to  take  only 
665  shares,  making  its  holdings  3,000  shares.  The  1,670  shares 
allotted  to  the  Equitable  Society  which  it  did  not  take  were  dis- 
tributed as  f ollows : 

Shares. 

James  H.  Hyde 565 

James  H.  Hyde  and  W.  H.  Mclntyre,  Trustees 702 

Annie  F.  Hydie 75 

And  the  balance,  328  shares,  to  other  members  of  the  Execu- 
tive Committee  of  the  Society. 

The  privilege  of  subscribing  to  this  increase  proved  to  be  very 
valuable,  which  will  appear  when  the  plans  which  had  been 
mapped  out  by  Mr.  Hyde  and  his  friends  for  the  further  increase 
of  capital  were  carried  out.  Mr.  Hyde  in  his  evidence  explains, 
when  asked  why  The  Equitable  Society  did  not  exercise  this 
privilege,  that  he  as  Chairman  of  the  Executive  and  Finance 
Committees,  and  the  other  members  of  these  committees  thought 
it  unwise  for  the  Society  to  take  in  at  $150  a  share  its  full 
allotment  of  stock.  Nevertheless,  on  his  own  personal  account 
and  for  his  mother  and  for  himself,  and  W.  H.  Mclntyre  as  Trus- 
tees, he  was  willing  to  assume  the  risk. 

The  next  step  taken  was  an  act  of  the  Legislature  passed 
April  2,  1902,  changing  the  name  of  the  corporation  to  the 


Equitable  Trust  Company  of  New  York.  On  January  28,  1903, 
its  capital  stock  was  again  increased  from  one  to  three  millions, 

the  additional  increase  to  be  paid  for  at  $500  per  share.  The 
list  of  stockholders  and  their  holdings  on  January  27,  1903,  the 
day  before  the  increase,  and  also  the  list  as  of  January  28,  1903, 
immediately  after  the  increase,  is  now  set  forth: 

List  of  Stockholders  of  Date  January  27,  1903. 

Shares. 

Alexander,  James  W 350 

Alexander,  William  75 

Alexander  &  Colby 280 

Alexander,  H.  M 10 

Alexander,  C.  B 150 

Adams,  2d,  C.  F 10 

Amendt,  A.  L 25 

Baldwin,  Jr.,  W.  H .' 10 

Bremner,  W.  B ! 10 

Cornell,  William  T 100 

Coler,  W.  N 75 

Coggeehall,  E.  W 100 

Colby,  Bainbridge 10 

Crocker,  W.  H 10 

Cuyler,  T.  DeWitt 150 

Deming,  H.  C 100 

Depew,  Chauncey  M 300 

Bowling,  Robt.  E 100 

Dryden,  John  F 100 

Equitable  Life  Assurance  Society 2,605 

Euvrard,  Camille 5 

Plake,  Albert 100 

Fitzgerald,  Louis 350 

Prick,  Henry  C 105 

Gillespie,  L.  L %.  25 

Hartley,  Estate  of  M 375 

Hartley,  G.  D 150 

Harriman,  E.  H 200 

Hall,  J.  M 10 


23 
List  of  Stockholders  of  Date  January  27,  1903 — (Continued] . 

Shares. 

Hebard,  George  W 50 

Hubbard,  T.  H 100 

Hyde,  James  H 1,117 

Hyde,  AnnieF 175 

Inman,  S.  M 10 

Jenkins,  Geo.  W 150 

Jessup,  Morris  K 150 

Jordan,  Thomas  D 150 

Johnson,  Bradish 100 

Kahn,  Otto  H 10 

Kuhn,  Loeb  &  Co 200 

Mackay,  Clarence  H 10 

Mercantile  Trust  Co 300 

Metcalf,  M.  B 75 

Middlebrook,  F.  J 10 

Moffat,  D.  H 10 

Murray,  M 20 

McCarter,  U.  H 50 

Mclntyre,  W.  H 200 

McCurdy,  S.  S 8 

Ochs,  A.  S 50 

Pendreigh,  F.  M 10 

Ripley,  Sidney  Dillon 235 

Smith,  J.  Henry. 100 

Stone,  Melville  E 40 

Squire,  George  H 200 

Snyder,  V.  P 100 

Tarbell,  Gage  E 200 

Van  Home,  Win.  C 10 

Williamson,  C.  F 20 

Winthrop,  H.  R .' . 100 

Wilson,  Geo.  F.  .  150 


10,000 


24 

List  of  Stockholders  as  of  January  28,  1903. 

Shares. 

Alexander,  James  W 638 

Alexander,  William   93 

Alexander  &  Colby 280 

Alexander,  H.  M 235 

Alexander,  C.  B 188 

Adams,  2d,  C.  F 110 

Amendt,  A.  L 32 

Armour,  J.  C 100 

Baldwin,  Jr.,  W.  H 110 

Blanchard,  T.  C.  E : 20 

Blanchard,  Fred  C 20 

Bremner,  W.  B 20 

Castles,  J.  W 50 

Cornell,  Wm.  T 125 

Coler,  Jr.,  W.  N 225 

Coggeshall,  E.  W 125 

Colby,  Bainbridge  85 

Crocker,  W.  H 110 

Coudert,  Jr.,  F.  R 100 

Cuyler,  T.  DeWitt 187 

Deming,  H.  C 125 

Depew,  Chauncey  M 375 

Bowling,  Robert  E 200 

Dryden,  John  F 250 

Dryden,  F.  F 50 

Equitable  Life  Assurance  'Society,  The 13,168 

Euvrard,  Camille 10 

Flake,  Albert  200 

Fitzgerald,  Louis 350 

Frick,  Henry  C 505 

Forgan,  J.  B 100 

Fulle,  F.  W 10 

Gregory,  Eliott 50 

Gillespie,  L.  L 107 


25 
List  of  Stockholders  as  of  January  28,  1903 — (Continued). 

Shares. 

Gould,  George  J 500 

Hartley,  Estate  of  M .' 469 

Hartley,  G.  D 188 

Harriman,  E.  H 500 

Hall,  J.  M 10 

Hebard,  George  W 63 

Hubbard,  T.  H 100 

Hunter,  R.  R 5 

Hyde,  James  H 3,000 

Hyde,  Annie  F 400 

Inman,  S.  M 20 

Jenkins,  George  W 188 

Jessup,  Morris  K 188 

Jordan,  Thomas  D 188 

Johnson,  Bradish 200 

Johnson,  Wilbur  S 20 

Kahn,  O.  H 10 

Kanouse,  E.  D 20 

Krech,  A.  W 50 

Kuhn,  Loeb  &  Co 1,150 

Kuser,  A.  R 65 

Mackay,  Clarence  H 110 

Mercantile  Trust  Company 375 

Metcalf,  M.  B 225 

Merrick,  Wm.  A 500 

Moffat,   D.  H 110 

Middlebrook,  F.  J 25 

Murray,  M 35 

McCarter,  U.  H 63 

Mclntyre,  W.  H , 250 

McCurdy,  S.  S 10 

McClusky,  George  W 50 

Ochs>  A'  S ^™*£^ 63 

Pendreigh,  F.  M /•r.vwSLTW.  -V\ 13 


26 
List  of  Stockholders  as  of  January  28,  1903 — (Continued). 

Shares. 

Porter,  Jr.,  H.  H 100 

Ripley,  Sidney  Dillon 294 

Rhoades,  Jr.,  L 5 

Rouzer,  Geo.  W 10 

Scheerer,  William 25 

Smith,  J.  Henry 125 

Stone,  Melville  E 40 

Squire,  George  H -. 600 

Snyder,  V.  P 125 

Tarbell,  G.  E r 450 

Tailer,  T.  S 50 

Taylor,  Jerome 20 

Van  Home,  Wm.  C 10 

Valentine,  P.  A 100 

Walker,  W.  M 5 

Ward,  L.  D . . . 50 

Ward,  Edgar  B 50 

Williamson,  C.  F 25 

Wirrth-rop,  H.  R 200 

Wilson,  Geo.  T 200 


30,000 

It  will  be  noted  that  the  Equitable  Society  is  now  the  owner  of 
13,168  shares,  an  increase  of  10,563  shares  over  its  holdings  on  the 
27th  day  of  January,  1903,  paid  for  at  f 500  per  share,  an  invest- 
ment of  |5,281,500.  Mr.  Krech,  in  his  testimony,  states  that  the 
book  value  of  the  Trust  Company  stock  after  this  increase  was 
paid  in  was  $383  1-3  per  share.  In  other  words  the  stock  that  was 
paid  for  at  |500  per  share  has  now  a  book  value  of  |383  1-3  per 
share,  a  loss  to  the  Society  of  f  116  2-3  per  share,  and  the  stock- 
holders who  took  the  stock  at  |150  had  the  book  value  of  their 
stock  increased  to  f  383  1-3,  a  profit  of  f 233  1-3  per  share,  a  very 
.handsome  showing  to  the  gentlemen  who  took  the  stock  alloted  to 
the  Equitable  Society,  and  the  shareholders  of  January  27,  1903, 


27     . 

before  the  increase,  and  a  very  large  loss  to  the  Society  by  reason 
of  the  determination!  of  the  executive  committee  that  it  was 
unwise  for  the  Equitable  to  take  the  stock  allotted  to  it.  Since 
this  reorganization  the  Equitable  Society  has  kept  on  deposit  with 
the  trust  company  an  average  of  about  $10,000,000  at  the  low 
rate  of  2  per  cent,  per  annum. 

The  simple  statement  of  the  above  transaction  directed  by  the 
officers  of  the  Equitable  Society  and  approved  by  their  executive 
committee,  demonstrates  that  they  were  not  solicitous  for  the 
Society's  welfare  but  active  in  promoting  their  own  private 
interests. 

NATIONAL  BANK  OF  COMMERCE. 

An  inquiry  was  instituted  into  the  consolidation  of  the  Western 
National  Bank  of  the  City  of  New  York  with  the  National  Bank 
of  the  United  States  of  New  York,  under  the  name  of  the  Western 
National  Bank  of  the  United  States  in  New  York.  Mr.  Snyder, 
president  of  the  National  Bank  of  Commerce,  stated  in  his1  evi- 
dence that  he  was  at  that  time,  1902,  president  of  the  Western 
National  Bank  of  the  City  of  New  York ;  that  it  was  a  flourishing 
banking  corporation;  that  The  Equitable  Society  held  from 
11,000  to  13,000  shares  of  its  stock — he  could  not  state  definitely, 
but  probably  about  12,000  shares;  that  its  book  value  was  245, 
and  its  market  value  about  600,  that  is,  600  bid,  625  asked ;  that 
the  stock  was  sought  for;  that  he  could  have  sold  the  controlling 
interest  at  |700  a  share;  that  The  Equitable  Society  owned  the 
controlling  interest.  Mr.  Bainbridge  Colby,  who  is  one  of  the 
attorneys  for  The  Equitable  Society,  in  his  evidence  furnished  a 
copy  of  the  circular  issued  to  the  stockholders  of  the  Western 
National  Bank  of  the  City  of  New  York  December  12,  1902,  which 
is  as  follows: 

To  the  Stockholders  of  the  Western  National  Bank  of  the  City 
of  Neiv  York: 

The  board  of  directors  of  this  bank,  by  unanimous  vote,  has 
adopted  resolutions,  copies  of  which  are  enclosed  herewith,  and 
has  authorized  the  calling  of  a  special  meeting  of  the  stockholders 
to  consider  and  vote  thereon. 


•     28 

Under  these  resolutions  it  is  proposed,  with  the  approval  of  the 
shareholders,  to  effect  a  consolidation  of  this  bank  with  The 
National  Bank  of  the  United  States  in  New  York  under  the  name 
of  The  Western  National  Bank  of  the  United  States  in  New  York, 
and  with  a  capital  of  $10,000,000,  and  a  surplus  of  f  2,500,000. 

To  accomplish  this  result  it  is  proposed  to  place  this  bank  in 
voluntary  liquidation,  arid  to  sell  its  assets  to  The  National  Bank 
of  the  United  States  in  New  York,  which  will  increase  its  capital 
stock  to  |10,000,000,  part  of  said  increase  to  be  used  in  the  pur- 
chase of  the  assets  of  this  bank. 

The  result  will  be  a  bank  of  the  first  magnitude,  with  a  capital 
and  surplus  commensurate  with  the  increased  scale  of  present 
financial  and  mercantile  transactions  and  supported  by  powerful 
interests  capable  of  sustaining  and  extending  its  growth,  viz.,  The 
Equitable  Life  Assurance  Society,  The  Mutual  Life  Insurance 
Company,  The  Morton  Trust  Company,  and  various  allied 
interests. 

Accordingly,  the  principal  stockholders  of  this  bank  have  named 
Messrs.  James  W.  Alexander,  James  H.  Hyde  and  Valentine  P. 
Snyder,  as  a  committee  to  effectuate  this  plan,  and  said  committee 
has  requested  your  Board  to  inform  you  that  said  committee  is 
authorized,  in  the  event  that  the  capital  stock  of  The  National 
Bank  of  the  United  States  in  New  York,  is  increased,  as  above,  to 
make  the  following  alternative  offers  to  the  stockholders  of  this 
bank,  namely : 

(1)  To  deliver  to  each  stockholder  for  every  flOO  par  value  of 
stock,  $70  in  cash  and  $140  at  par  in  the  stock  of  the  Consolidated 
Bank;  or 

(2)  To  pay  to  every  stockholder  who  does  not  elect  to  join  in 
the  consolidation,  for  each  $100  in  stock  of  this  bank,  $600  in  cash. 

This  offer  is  conditioned,  of  course,  upon  its  acceptance  on  or 
prior  to  January  6,  1903. 

A  majority  of  the  shareholders  of  this  bank,  as  well  as  a  major- 
ity of  the  shareholders  of  the  National  Bank  of  the  United 
States,  have  signified  their  approval  of  the  above  plan,  and  its 


29 

acceptance  is  recommended  as  highly  advantageous  to  every  share- 
holder by  the  respective  boards  of  directors. 

You  are,  therefore,  requested  to  deposit  your  stock,  endorsed 
in  blank,  with  The  Equitable  Trust  Company  of  New  York,  No. 
25  Nassau  street,  in  the  City  of  New  York,  om  or  before  January 
6,  1903,  in  exchange  for  a  negotiable  receipt  entitling  you,  upon 
the  consummation  of  the  above  plan,  to  either  cash,  or  cash  and 
stock,  as  you  may  have  elected. 

You  are  also  requested  to  sign  and  return  in  the  enclosed 
envelope  the  accompanying  form  of  proxy,  signed  in  the  presence 
of  a  witness,  to  vote  your  stock  in  favor  of  the  foregoing  plan. 

New  York  City,  December  12,  1902. 

JAMES  W.  ALEXANDER, 
H.  M.  ALEXANDER, 
CHARLES  T.  BARNEY, 
C.  LED  YARD  BLAIR, 
J.  M.  CEBALLOS, 
WILLIAM  N.  COLER,  JR., 
CHAUNCEY  M.  DEPEW, 
JOHN  F.  DRYDEN, 
MARTIN  ERDMANN, 
Louis  FITZGERALD, 
VALENTINE  P.  SNYDER, 
GEORGE  J.  GOULD, 
THOMAS  H.  HUBBARD, 
JAMES  H.  HYDE, 
BRAYTON  IVES, 
OTTO  H.  KAHN, 
LUTHER  KOUNTZE, 
JOHN  HOWARD  LATHAM, 
DAVID  H.  MOPFAT, 
SIDNEY  F.  TYLER, 
J.  H.  PARKER, 

Board  of  Directors. 


30 

Resolutions  of  Directors. 

WHEREAS,  it  is  proposed  by  the  holders  of  a  majority  in  amount 
of  the  shares  of  the  capital  stock  of  The  Western  National  Bank 
of  the  City  of  New  York,  and  of  the  National  Bank  of  the  United 
States  in  New  York,  that  the  said  banks  be  consolidated  by  the 
purchase  by  The  National  B.ank  of  the  United  States  of  all  the 
assets  of  this  bank  at  the  book  value  thereof,  as  shown  by  this 
bank's  statement  of  its  assets  and  liabilities  on  the  date  of  such 
sale,  and  the  assumption  by  The  National  Bank  of  the  United 
States  of  the  liabilities  of  this  bank,  of  the  date  of  such  sale,  as 
shown  by  such  statement ; 

RESOLVED,  that  in  the  opinion  of  this  board  it  is  desirable,  and 
for  the  best  interests  of  the  shareholders  of  this  bank,  that  such 
proposed  consolidation  be  made,  and  accordingly  that  this  bank  be 
placed  in  voluntary  liquidation,  under  the  provisions  of  sections 
5220  and  5221  of  the  United  States  Revised  Statutes,  such  liquida- 
tion to  take  effect  on  the  31st  day  of  January,  1903 ; 

RESOLVED,  FURTHER,  that  a  special  meeting  of  the  stockholders 
of  this  bank  be  and  is  hereby  called,  to  be  held  at  its  banking 
house,  15  Nassau  street,  New  York  city,  on  the  13th  day  of  Janu- 
ary, 1903,  for  the  purpose  of  voting  on  the  following  propositions : 

To  place  this  Bank  in  voluntary  liquidation,  under  the  provis- 
ions of  sections  5220  and  5221  of  the  United  States  Revised 
Statutes,  such  liquidation  to  take  effect  on  the  31st  day  of  Jan- 
uary, 1903 ;  and  to  authorize  and  approve  the  sale  of  all  the  assets 
of  this  Bank  at  the  book  value  thereof,  as  shown  by  the  Bank's 
statements  of  its  assets  and  liabilities  of  the  date  of  such  sale, 
and  the  assumption  by  The  National  Bank  of  the  United  States  of 
all  the  liabilities  of  this  Bank,  as  shown  by  such  statement; 

RESOLVED,  FURTHER,  that  thirty  days'  notice  of  the  proposed 
meeting  be  given  to  each  shareholder  of  record,  by  publication  in 
at  least  one  newspaper  published  in  the  City  of  New  York. 

RESOLVED,  FURTHER,  that  Wm.  A.  Wheelock,  Thomas  D.  Jordan 
and  Bainbridge  Colby  (neither  of  whom  is  a  director  or  officer  or 
employee  of  this  Bank),  be  and  they  are  hereby  authorized  to 


31 

request  each  stockholder  to  constitute  them  and  either  of  them  as 
proxy,  agent  and  attorney,  to  vote  and  act  at  said  meeting  of  the 
stockholders  upon  the  foregoing  propositions,  and  that  a  proxy  be 
enclosed  with  the  notice  of  the  meeting,  to  be  mailed  to  each  stock- 
holder, in  the  form  submitted  to  and  approved  by  this  meeting. 

RESOLVED,  FURTHER,  that  the  transfer  books  of  the  shares  in  the 
capital  stock  of  this  Bank  be  closed  at  3  o'clock  p.  m  on  the  6th 
day  of  January,  1903,  and  remain  closed  until  10  o'clock  a.  m.  on 
the  15th  day  of  January,  1903. 

It  appears  from  this  circular  that  the  Board  of  Directors  of 
The  Equitable  Society  accepted  the  conditions  for  this  merger, 
which  in  substance  were  to  deliver  to  each  stockholder  for  every 
$100,  par  value,  of  stock,  $70  in  cash  and  $140  at  par  in  the  con- 
solidated bank,  or  to  pay  to  each  stockholder  who  did  not  come 
into  the  consolidation  for  each  $100  in  stock,  $600  in  cash.  The 
Equitable  Society,  through  its  Executive  Committee,  voted  to 
accept  the  offer  of  $70  in  cash  and  $140  in  the  stock  of  the 
consolidated  bank.  The  Western  National  Bank  of  the  United 
States  was.  afterwards  merged  into  the  National  Bank  of  Com- 
merce. 

It  also  appears  from  this  statement  that  what  the  Society 
really  received  for  its  stock  in  the  Western  National  Bank  of 
New  York  was  $210  per  share,  and  it  would  have  been  much 
more  profitable  to  the  Society  to  have  disposed  of  its  holdings 
at  the  offered  $600  per  share,  or  better  still  to  have  sold  its  con- 
trolling interests  for  $700  a  share,  and  it  appears  further  tha* 
in  the  merger,  the  book  value  of  the  stock  of  the  Western 
National  Bank  of  New  York  being  $245  per  share,  it  received 
$35  a  share  on  its  12,000  shares  or  holdings  less  than  the  book 
value,  which  Mr.  Snyder  stated  was  a  correct  statement.  Mr. 
Snyder  was  asked  what  The  Equitable  Society  really  gained  by 
the  merger,  and  he  answered  "  Nothing  but  promises  and  pros- 
pects," which  I  conclude  did  not  materialize,  as  he  afterwards 
stated  that  the  present  book  value  of  the  National  Bank  of 
Commerce  stock  was  between  145  and  150.  The  merger  and  the 


32 

organization  of  this  great  bank  seems  to  have  been  effected  to 
gratify  the  ambition  of  the  officers  of  The  Equitable  Society, 
without  regard  to  the  financial  interests  of  the  Society  and  its 
policyholders. 

This  is  a  brief  statement  of  a  few  of  the  transactions  between 
The  Equitable  Society  and  seven  of  the  ten  corporations  which 
are  advertised  as  affiliated  companies.  Time  has  not  permitted 
even  a  partial  investigation  of  its  business  relations  with  the 
other  three,  viz.:  The  Lawyers'  Title  Insurance  Company,  the 
Lawyers'  Mortgage  Insurance,  and  the  Franklin  National  Bank. 
But  the  facts  here  stated  disclose  a  very  decided  tendency  on  the 
part  of  some  of  the  directors  and  officers  of  the  Society  to  sacri- 
fice its  interests  in  order  that  they  may  reap  the  profits  through 
the  media  of  these  corporations.  The  opportunity  was  there  as 
well  as  the  disposition,  and  it  would  require  a  much  more 
thorough  investigation  than  I  have  been  able  to  make  to  deter- 
mine the  full  amount  of  the  loss  that  the  Society  has  suffered 
at  their  hands. 

SYNDICATE  TRANSACTIONS. 

The  syndicate  transactions  conducted  by  "James  H.  Hyde  and 
Associates,"  have  been  so  well  advertised  through  the  press  that 
they  have  become  notorious.  According  to  the  evidence  of 
William  H.  Mclntyre,  the  letters  of  Kuhn,  Loeb  &  Company  to 
Mr.  Hyde  and  Mr.  Hyde's  correspondence,  copies  of  which  he  sub- 
mitted to  us,  the  following  are  the  material  facts  relative  to  these 
transactions : 

METROPOLITAN  STREET  KAILWAY  FOUR  PER  CENT  BONDS  OF  2002, 

SYNDICATE. 

On  June  11,  1902,  Kuhn,  Loeb  &  Co.,  allotted  to  James  H.  Hyde 
and  Associates  a  participation  in  this  syndicate  of  f  1,000,000,  at 
94  and  interest.  June  18,  1902,  the  Executive  Committee  of  The 
Equitable  Society  recommended  the  purchase  of  f  1,000,000  of  these 
bonds  at  97%  and  interest.  June  20,  1902,  the  purchase  of  these 


33 

bonds  was  reported  to  the  Executive  Committee  at  97%  and 
interest,  less  i/2  per  cent,  and  on  July  8,  1902,  the  bonds  were 
delivered  to  the  Society  by  Kuhn,  Loeb  &  Company.  From  this 
transaction  James  H.  Hyde  and  Associates  realized  profits  of 
§30,210.38,  which  were  divided  according  to  the  following  sub- 
allotment  : 

Allotment.  Profit. 

Equitable  Trust  Company $100,000  $3,021  03 

Western  National  Bank 100,000  3,021  03 

Commercial   Trust  Company,  Phila- 
delphia     100,000  3,021  03 

Franklin   National    Bank,    Philadel- 
phia    100,000  3,021  03 

V.  P.  Snyder 50,000  1,510  52 

H.  C.  Deming 50,000  1,510  52 

G.  H.  Squire 100,000  3,021  03 

James  W.  Alexander 150,000  4,531  58 

James  H.  Hyde 150,000  4,531  58 

W.  H.  Mclntyre 100,000  3,021  03 

$30,210  38- 

PHILADELPHIA,  BALTIMORE  AND  WASHINGTON  4  PER  CENT  BONDS, 
AND  LONG  ISLAND  KAILROAD  4  PER  CENT  BONDS  SYNDICATE, 

On  October  28,  1903,  Kuhn,  Loeb  &  Co.  allotted  to  James  H. 
Hyde  and  Associates  a  participation  in  this  syndicate  of  $600,000. 
On  October  30,  1903,  the  matter  of  buying  some  of  these  bonds 
was  referred  to  the  President  and  Vice-President  with  power. 
On  November  18,  1903,  the  committee  recommended  the  purchase 
of  $1,000,000  of  the  Philadelphia,  Baltimore  &  Washington  bonds 
from  Kuhn,  Loeb  &  Co.,  at  104  and  interest,  and  on  November  20, 
1903,  the  purchase  of  $1,000,000  of  these  bonds  at  104  and  interest 
was  reported.  By  the  purchase  of  $1,000,000  of  the  Long  Island 
Kailroad  refunding  bonds  the  cost  of  the  former  bonds  was 
reduced  to  102J. 


34 

From  this  transaction  James  H.  Hyde  and  Associates  realized 
a  profit  of  |11,930.55,  which,  was  divided  according  to  the  follow- 
ing sub-allotment : 

Allotment.  Profit. 

James  W.  Alexander f  150,000  $2,982  64 

James  H.  Hyde. 150,000  2,982  64 

George  H.  Squire . 150,000  2,982  64 

W.  H.   Mclntyre 150,000  2,982  63 


111,930  55 


OREGON  SHORT  LINE  REFUNDING  MORTGAGE  4  PER  CENT  25-YEAR 
GOLD  BONDS  SYNDICATE. 

On  October  28,  1904,  Kuhn,  Loeb  &  Co.  allotted  to  James  H. 
Hyde  and  Associates  a  participation  in  this  syndicate  of 
11,250,000,  at  96  and  accrued  interest.  On  November  2,  1904,  the 
Executive  Committee  of  The  Equitable  Society  recommended  the 
purchase  of  f  1,000,000  of  these  bonds  at  97  and  interest,  and  soon 
thereafter  $1,250,000  were  purchased  from  Kuhn,  Loeb  &  Co.  at 
97  by  the  Society.  Mr.  Mclntyre  explains  that  the  syndicate 
made  some  profit  in  the  way  of  commissions  on  the  sales. 

From  this  transaction  James  H.  Hyde  and  Associates  realized 
a  profit  of  |25,047.46,  which  was  divided  according  to  the  follow- 
ing sub-allotment: 

Allotment.  Profit. 

James  W.  Alexander f  625,000         $12,523  73 

James  H.  Hyde 625,000  12,523  73 


$25,047  46 


P.,  C.,  C.  &  ST.  Louis  RAILWAY  CONSOLIDATED  MORTGAGE  FOUR 
PER  CENT.  GOLD  BONDS  SYNDICATE. 

On  September  26,  1904,  Speyer  &  Company  and  Kuhn,  Loeb 
&  Company  allotted  to  James  H.  Hyde  and  Associates  a  partici- 


35 

pation  in  this  syndicate  of  f 500,000  at  par  and  interest.  On 
October  14,  1904,  the  Equitable  Society  bought  from  Kuhn,  Loeb 
&  Company  $1,000,000  of  these  bonds  at  103. 

From  this  transaction  James  H.  Hyde  and  Associates  realized 
a  profit  of  $10,261.46,  which  was  divided  as  follows : 

Allotment.  Profit. 

James  W.  Alexander $250,000  $5,130  73 

James  H.  Hyde 250,000  5,130  73 

$10,261  46 


NORFOLK   AND   WESTERN   DIVISIONAL   FIRST   LIEN   AND   GENERAL 
MORTGAGE  FOUR  PER  CENT.  BONDS  SYNDICATE. 

On  October  14,  1904,  Brown  Brothers  &  Co.  allotted  to  James 
H.  Hyde  and  Associates  a  participation  of  $250,000  in  this  syn- 
dicate at  94J  and  interest.  On  October  17,  1904,  the  Executive 
Committee  of  the  Equitable  Society  recommended  the  purchase 
of  $250,000  of  these  'bonds  at  96£  and  interest,  less  J  per  cent, 
commission. 

From  this  transaction  James  H.  Hyde  and  Associates  realized 
a  profit  of  $3,758,  which  was  divided  as  follows: 

Allotment.  Profit. 

James  W.  Alexander $125,000  $1,879  00 

James  H.  Hyde 125,000  1,879  00 

$3,758  00 


IMPERIAL  JAPANESE  GOVERMENT  Six  PER  CENT.  STERLING  LOAN 
GUARANTEED  SYNDICATE. 

First  Syndicate. 

May  6, 1904,  Kuhn,  Loeb  &  Company  allotted  to  James  H.  Hyde 
and  Associates  a  participation  in  this  syndicate  of  400,000  pounds, 
or  about  $2,000,000  par  value.  On  the  same  day  the  Executive 
Committee  of  the  Equitable  Society  left  the  matter  of  »subscrib- 


36 

ing  for  these  bonds  to  Messrs.  Alexander  and  Squire  with  power. 
Within  a  reasonable  time  thereafter  (the  exact  date  does  not 
appear)  the  Society  bought  substantially  the  same  amotfnt  of 
these  bonds  from  Kuhn,  Loeb  &  Company. 

From  this  transaction  James  H.  Hyde  and  Associates  made 
a  total  profit  of  $25,635.41,  which  was  divided  according  to  the 
following  sub-allotment: 

Allotment.  Profit. 

Equitable  Life  Society.  . .- $750,000  $9,613  26 

James  W.  Alexander 250,000  3,204  43 

James  H.  Hyde 250,000  3,204  43 

George  H.  Squire 250,000  3,204  43 

W.  H.  Mclntyre 250,000  3,204  43 

H.  C.  Deming 125,000  1,602  22 

A.  W.  Krech 125,000  1,602  21 

$25,635  41 


Second  Syndicate. 

As  a  part  of  the  same  transaction  Kuhn,  Loeb  &  Company  al- 
lotted to  James  H.  Hyde  and  Associates  a  participation  in  a 
second  syndicate  of  these  Japanese  bonds  of  $1,200,000. 

By  this  transaction  James  H.  Hyde  and  Associates  realized  a 
profit  of  $23,424,  which  was  divided  according  to  the  following 
sub-allotment : 


Allotment. 

Profit. 

Equitable  Life  

$450,000 

$8,784  00 

J.  W.  Alexander  

150,000 

2,928  00 

James  H.  Hyde  

150,000 

2,928  00 

George  H.  Squire  

150,000 

2,928  00 

William  H.  Mclntyre  

150,000 

2,928  00 

H.  C.  Deming  

75,000 

1,464  00 

A.  W.  Krech.  

75,000 

1,464  00 

$23,424  00 


37 

IMPERIAL  JAPANESE  GOVERNMENT  Six  PER  CENT.  STERLING  LOAN 
(SECOND  SERIES)  SYNDICATE. 

On  November  3,  1904,  Kuhn,  Loeb  &  Company  allotted  to  James 
H.  Hyde  and  Associates  a  participation  in  this  syndicate  of 
400,000  pounds,  or  about  $2,000,000  par  value.  On  December  5, 
1904,  the  Equitable  Society  purchased  $1,600,000,  par  value  of 
these  bonds  at  88.  It  does  not  appear  at  what  price  the  syndicate 
got  them,  but  by  this  transaction  James  H.  Hyde  and  Associates 
realized  a  total  profit  of  $62,815.13,  which  was  divided  according 
to  the  sub-allotment  as  follows : 


James  W   Alexander     

Allotment. 

$180,000 

Profit. 

$28,266  81 

James  H.  Hyde  

180,000 

28,266  81 

Mercantile  Trust  Companv  

20,000 

3,140  75 

Equitable  Trust  Company         .  . 

20  000 

3,140  76 

$62,815  13 


ATCHISON,  TOPEKA  &  SANTA  FE  FOUR  PER  CENT  SERIAL  DEBENTURE 

BONDS  SYNDICATE. 

Om  January  10,  1902,  J.  P.  Morgan  &  Co.  allotted  to  Jame®  H. 
Hyde  and  Associates  a  participation  in  this  syndicate  of  $500,000 
at  94J  and  accrued  interest. 

On  January  13,  1902?  the  matter  of  buying  these  bonds  was 
brought  up  for  consideration  before  the  Executive  Committee 
of  the  Society,  and  on  or  about  January  15,  1902,  the  purchase 
of  $1,000,000  of  these  bonds  at  prices  ranging  from  97  to  98|  was 
reported. 

By  this  transaction  James  H.  Hyde  and  Associates  realized  a 
profit  of  $11,422,  which  was  divided  according  to  the  following 
sub-allotment : 

Allotment.  Profit. 

James  W.  Alexander $100,000  $2,284  40 

James  H.  Hyde 100,000  2,284  40 


38 

Allotment.  Profit. 

George  H.  Squire f  100,000  f  2,284  40 

Louis  Fitzgerald 100,000  2,284  40 

W.  H.  Mclntyre 100,000  2,284  40 

$11,422  00 


By  simple  addition  it  appears  that  the  gentlemen  and  corpora- 
tions associated  in  these  transactions  made  the  following  profits : 

James  H.  Hyde $63,731  32 

James  W.  Alexander 63,731  32 

George  H.  Squire 14,420  50 

William  H.  Mclntyre 14,420  50 

H.  C.  Deming 4,576  74 

Valentine  P.  Snyder 1,510  52 

Alvin  W.  Krech 3,066  21 

Louis  Fitzgerald 2,284  40 

The  Equitable  Trust  Co 6,161  79 

The  Western  National  Bank 3,021  03 

The  Commercial  Trust  Co.  of  Philadelphia ,  3,021  03 

Franklin  National  Bank 3,021  03 

Mercantile  Trust  Co 3,140  75 


Total $186,107  14 


The  corporations  mentioned  were  taken  in  and  given  a  small 
participation  because  they  were  "  affiliated  "  with  the  Equitable 
Society,  and  the  other  associates  were  interested  in  their  divi- 
dends. All  of  these  gentlemen  who  divided  these  profits  were 
directors  of  the  Society  and  six  of  them  members  of  the  executive 
and  finance  committees.  As  syndicators  they  took  these  several 
allotments  of  securities  and  as  directors  of  the  Society  they  caused 
it  to  purchase  of  Kuhn,  Loeb  &  Company  substantially  the  same 
amounts  which  were  allotted  to  them.  To  illustrate  from  the  first 
transaction  above  set  forth:  On  June  11,  1902,  Kuhn,  Loeb  & 
Company  allotted  to  James  H.  Hyde  and  associates  a  participa- 


39 

tion  of  |1,000,000  in  the  Metropolitan  Street  Railway  four  per 
cent,  bond  syndicate  at  94,  and  one  week  thereafter  the  Equitable 
Society  bought  the  same  amount  at  about  97.  This  participation 
was  allotted  to  these  men  because  it  was  known  they  could  dispose, 
of  them,  and  when  they  accepted  the  participation  they  knew 
where  they  could  sell  them.  Why  should  the  officers  of  the 
Society  make  this  three  per  cent,  profit?  Why  not  allow  the 
Society  itself  this  participation  and  save  this  $30,000,  since  it  was 
the  intention  that  it  should  buy  the  bonds  and  take  the  risk? 
That  was  not  contrary  to  its  rules,  for  it  was  given  a  small  par- 
ticipation in  some  of  these  syndicates.  The  simple  truth  is  that 
they  preferred  to  make  these  several  profits  themselves. 

Mr.  Hyde  and  associates  raise  the  point  that  the  Society  did 
not  Jose  by  the  purchase  of  these  bonds,  but  that  is  no  excuse 
for  them.  If  the  market  went  down  the  Society  would  have  lost 
and  if  it  went  up  the  Society  should  get  the  profit.  They  were 
trustee's.  Their  first  obligation  was  to  the  trust  estate  which 
they  represented.  They  should  not  be  permitted  to  make  money 
for  themselves  at.  the  loss  or  even  at  the  risk  of  the  Society. 
The  profits  which  they  and  each  of  them  realized  belong  to  the 
Society.  Mr.  Hyde  and  Mr.  Alexander  seem  to  have  thought 
so,  or  were  so  advised  by  their  counsel  after  the  trouble  began, 
for  one  of  these  gentlemen  turned  over  to  M.  Murray  as  Trustee 
all,  and  the  other  a  large  part,  of  his  profits  from  these  trans- 
actions. All  these  men  should  be  compelled  to  pay  back  to  the 
Society  these  several  amounts  with  interest.  This  is  only  very 
mild  punishment.  And  the  affiliated  companies  should  also  pay 
to  the  Society  the  several  amounts  received  by  them  less  any 
portions  thereof  which  the  Society  has  received  in  the  form  of 
dividends. 

This  question  was  put  to  Mr:  Alexander  on  the  witness  stand : 
"Were  you  in  the  syndicate?"  And  he  answered:  "Mr.  Hyde 
managed  these  matters  on  his  own  voluntary  part  and  put  me 
down  for  a  share.  When  the  matter  came  complete  I  turned 
what  I  made  over  to  the  cashier.  Whether  there  is  any  legal 
question  about  it  or  not,  it  seemed  to  me  a  questionable  thing  for 


40 

an  officer  to  participate  in  a  syndicate  that  was  making  money 
by  selling  bonds  concurrently  to  the  company."  He  further  ex- 
plains that  he  did  not  know  at  the  time  that  The  Equitable 
Society  was  buying  any  portion  of  the  bonds  or  securities  in 
which  James  H.  Hyde  and  Associates  were  allotted  participa- 
tion, and  he  claims  he  was  conscious  of  no  wrong  or  a  violation 
of  his  duty  as  an  officer  of  the  Society.  Mr.  Hyde  insists  that 
Mr.  Alexander  was  aware  of  the  transactions  which  were  being 
made  and  knew  from  what  source  the  profits  came.  He  put  in 
evidence  photographs  of  eight  checks  drawn  by  himself  to  Mr. 
Alexander  in  payment  of  Mr.  Alexander's  profits  in  these  eight 
transactions',  and  he  produced  a  letter  and  states  other  facts  by 
which  he  claims  that  Mr.  Alexander  was  not  in  ignorance  as  to 
the  character  of  the  business  being  done.  He  does  not  plead 
ignorance  of  the  facts  on  his  own  part,  but  insists  that  they 
were  entirely  legitimate  and  proper  business  transactions.  Mr. 
Mclntyre,  who  was  a  very  candid  and  exact  witness',  stated  all 
the  facts  fully  and  completely.  He  has  not  returned  to  M.  Mur- 
ray, Trustee,  or  to  anybody  else,  any  part  of  his  profit,  but  makes 
the  argument  that  since  he  was  not  at  that  time  a  member  of  the 
Executive  or  Finance  Committees  he  is  entirely  blameless,  and 
that  his  part  in  the  transaction  was  entirely  honorable  and 
legitimate.  His  comprehension  as  to  the  duties  of  a  director 
toward  his  trust  estate  is  not  surprising,  for  he  was  reared  in 
the  Society  since  the  age  of  fourteen,  and  under  the  immediate 
tutelage  of  the  late  Henry  B.  Hyde. 

OTHER  STOCK  TRANSACTIONS. 

The  schedules  prepared  and  verified  by  the  Financial  Secretary 
of  the  Society  of  the  purchases  and  sales  of  the  stock  of  the  Mer- 
cantile Trust  Company  and  of  the  Equitable  Trust  Company  dis- 
close some  peculiar  and  unusual  business  transact ioms.  During 
the  years  1903  and  1904  it  appears  from  this  schedule  that  the 
Equitable  Society  was  a  frequent  purchaser  of  the  stock  of  the 
Equitable  Trust  Company  at  from  f 640  to  $750  a  share,  and  dur- 


41 

ing  the  same  period  of  time  it  was  disposing  of  these  securities  to 
various  individuals  at  about  $500  a  share.  In  the  schedule  fur- 
nished of  the  stock  transactions  of  the  Mercantile  Trust  Company 
it  appears  that  as  early  as  1900  the  Equitable  Society  waa_a_ 
purchaser  of  the  stock  of  that  company  at  $800  a  share  and  during 
the  years  1904  and  1905  it  has  been  a  frequent  purchaser  of  the 
stock  of  that  company  at  about  $1,000  a  share.  In  the  record  of 
sales  in  1900,  on  January  4th  is  a  sale  of  100  shares  to  George  J. 
Gould  art  $500  a  share,  and  upon  the  same  day  50  shares  to  Mr. 
Frick  at  $850  a  share,  and  on  December  20,  1901,  100  shares  to 
M.  L.  Schiff  at  $900  a  share  and  on  January  3,  1902— fourteen 
days  later — 100  shares  to  E.  H.  Harriman  at  $500  a  share.  These 
purchases  and  sales,  it  appears  from  the  record,  were  nearly  all 
approved  by  the  finance  committee  of  the  Society. 

There  is  one  other  transaction  covering  the  sale  of  securities 
which  I  call  attention  to.  On  November  18,  1904,  the  Equitable 
Society  re-sold  to  Kuhn,  Loeb  &  Company  $1,123,308,  par  value, 
of  the  first  issue  of  Japanese  bonds  at  91J  flat.  With  the  interest 
which  had  accrued  om  them  at  that  time  it  was  practically  91  net. 
These  bond®  were  pur  chased1  from  Kuhn,  Loeb  &  Company  May 
25th  and  June  30,  1904,  at  93J  and  interest,  a  loss  in  the  sale  to 
the  Equitable  Society  of  2J  per  cent.,  amounting  in>  the  aggregate 
to  $28,082.70.  If  they  had  been  held  they  could  have  been  sold  at 
a  very  much  higher  figure.  When  the  inquiry  was  made  of  Mr. 
Schiff  in  his  evidence  as  to  the  reason  for  this  sale  of  bonds,  he 
stated  that  possibly  the  Society  was  preparing  to  purchase  the 
second  issue  of  Japanese  bonds,  which  I  find1  was  correct,  for  on 
December  5,  1904,  the  Equitable  Society  purchased  $1,600,000  par 
value  of  the  second  issue  of  Japanese  bonds,  and  the  total  profit 
realized  by  James  H.  Hyde  and  Associates  in  this  transaction  was 
$62,815.13,  not  a  very  advantageous  transaction!  for  the  Equitable 
Society  but  a  very  profitable  one  to  the  James  H.  Hyde  and  Asso- 
ciates syndicate. 

Mr.  Schiff  in  his  evidence  was  also  referred  to  the  matter  of 
the  sale  on  December  25,  1904,  to  the  Equitable  Society  of 
$1,000,000  of  the  Missouri  Pacific  Gold  Fours  of  1945  at  94  and 


42 

interest  by  Kuhn,  Loeb  &  Company.  He  was  asked  if  those 
were  not  collateral  bonds  secured  by  the  stock  of  the  Iron 
Mountain  Railroad  and  if  he  thought  a  collateral  bond  of 
that  character  was  a  fit  investment  for  a  life  insurance 
company.  He  replied  that  he  thought  that  ought  to  be  said 
to  the  members  of  the  Executive  Committee  who  decided  upon 
the  purchase.  He  stated  though  that  he  was  perfectly  willing 
to  risk  his  reputation  as  favoring  the  purchase,  and  stated  that 
Kuhn,  Loeb  &  Co.  would  be  willing  to  take  the  bonds  back  at 
their  cost  at  any  time  within  a  week.  Later,  on  my  advice, 
the  Executive  Committee  of  the  Equitable  Society  re-sold  the 
bonds  to  Kuhn,  Loeb  &  Company. 

An  inquiry  was  also  made  of  Mr.  Schiff  in  reference  to  the 
sale  to  the  Equitable  Society  of  fl,000,000  of  the  Metropolitan 
Street  Railroad  Fours  of  2002  at  97J  and  interest,  less  J  per  cent., 
and  he  was  asked  if  they  were  an  underlying  bond  of  the  Metropol- 
itan system,  and  he  said,  No,  they  were  a  refunding  bond.  He  was 
asked  if  he  thought  that  a  refunding  bond  of  a  traction  company 
was  such  a  bond  as  a  life  insurance  company  could  safely  invest 
in.  His  reply  was  that  he  was  very  much  mistaken  if  not  all 
life  companies  had  them.  An  inquiry  was  then  made  as  to  what 
the  present  worth  of  those  bonds  was  and  the  answer  was  he 
believed  about  91.  The  facts  are  that  within  the  last  ten  days 
a  reputable  firm  has  offered  for  sale  a  large  block  of  these  bonds 
at  89  and  interest. 

These  transactions  are  referred  to  simply  to  show  the  manner 
in  which  the  Executive  officers  have  conducted  the  business  of 
the  Society. 

SALARIES. 

An  examination  of  the  Society's  salary  lists  convinces  me  that 
the  ordinary  clerks  and  employees  are  not  overpaid.  So  far  as 
I  have  been  able  to  learn  or  observe  they  are  faithful  and  com- 
petent and  earn  their  money.  The  extravagance  and  waste  in 
the  form  of  personal  compensation  appear  in  the  salary  list  of 
the  high  executive  officers  and  their  immediate  and  favored 
assistants. 


43 


The  following  schedule  shows   the  salaries  of  the  executive 
officers  since  1900 : 

Executive  Department. 


NAME. 

James  W.  Alexander,  Pres. , 
J.  H.  Hyde,  Vice-Pres 


1900.         1901.         1902.         1903.         1904.         1905. 

$75,000    $75,000    $75,000  $100,000  $100,000  $100,000 

30,000      30,000       75,000    100,000    100,000    100,000 


G.  E.  Tarbell,  2d  Vice-Pres.  .  . 
G.  T.  Wilson,  3d  Vice-Pres  .  .  . 
W.H.  Mclntyre,  4th  Vice-Pres. 
W.  Alexander,  Secretary  

50,000 
25,000 
10,000 
25,000 

Aug.  1. 
60,000 
25,000 
12,000 
25,000 

60,000 
30,000 
20,000 
25,000 
2,500 
17,500 
30,000 
18,000 

60,000 
30,000 
25,000 
25,000 
3,000 
17,500 
30,000 
18,000 

60,000 
30,000 
25,000 
25,000 
3,000 
17,500 
30,000 
18,000 
3,600 

July  1. 
12,500 

May  1. 
18,000 
3,500 
25,000 
15,000 
12,000 
10,000 
12,000 
7,500 

June  1. 
5,000 
4,000 
12,000 

10,000 
3,600 
10,000 
4,000 
20,000 

60,000 
30,000 
30,000 
25,000 
'     6,000 
17,500 
35,000 
18,000 
4,800 

12,500 

18,000 
3,500 
25,000 
15,000 
12,000 
10,000 
15,000 
7,500 

5,000 
4,200 
12,000 

10,000 
3,600 
10,000 
4,000 
20,000 

H.  K.  Winthrop,  Asst.  Sec  

J.  G.  Van  Cise,  Actuary  
T.  D.  Jordan,  Comptroller.  .  .  . 
S.  D.  Kipley,  Treas  

17,500 
25,000 
18,000 

17,500 
30,000 
18,000 

W.  D.  Bremner,  Asst.  Treas.. 
F.  W.  Jackson,  Auditor  

10,000 

3,500 
25,000 
15,000 

10,000 

Oct.  25. 
15,000 
3,500 
25,000 
15,000 

10,000 

15,000 
3,500 
25,000 
15,000 

10,000 

15,000 
3,500 
25,000 
15,000 

S.  C  .Boiling,  Supt.  of  Agencies 
J    B.  Loring    Registrar 

E.  W.  Lambert,  Med.  Dir  
Edward  Curtis,  Med.  Dir  

W.  K.  Bross,  Med.  Dir  

Arthur  Tell,  Med.  Dir  

12,000 
7,500 

Sept.  18. 
3,200 
3,600 
12,000 

7,500 
3,600 
10,000 
4,000 
20,000 

M.  Murray,  Cashier  

10,000 
7,500 

10,000 
7,500 

10,000 
7,500 

R.  G.  Hann,  Asst.  Actuary... 
Robert  Henderson  Asst  Aft 

S.  S.  McCurdy,  Asst.  Regis'r.  . 
A.  W.  Maine,  Asso.  Auditor.. 

H.  R.  Coursen,  Asst.  Auditor. 
W.  P.  Halsted,  Collector  
W.  E.  Johnson,  Mort.  Regis'r. 
Samuel  Frost,  Recorder.  .  .  . 

10,000 
M 

3,000 
10,000 

arch  22. 
7,500 
6,000 

2,800 
15,000 

3,600 
10,000 

7,500 
6,000 
7,500 
4,000 
15,000 

6,000 

2,600 
15,000 

Geo.  H.  Squire,  Fin.  Man.... 

The  following  schedule  shows  the  total  amounts  paid  for  sala- 
ries to  executive  officers  during  said  period: 

1900   |380,100 

1901    . .- 422,300 

1902   491,100 

1903 558,600 

1904    613,600 

These  figures  show  an  increase  in  salaries  of  executive  officers 
of  the  Society  in  1904  over  1900  of  61.43  per  cent. 


44 

'.  Mr.  Hyde  was  advanced  in  salary  the  most  rapidly.  He  gradu- 
ated from  college  in  1898  at  the  age  of  twenty-two.  In  1900  he 
drew  a  salary  of  f 30,000,  also  in  1901;  in  1902  his  salary  was 
advanced  to  $75,000,  and  in  1903,  at  the  age  of  twenty-seven,  it 
was  jumped  to  an  even  f  100,000. 

The  salaries  of  the  president  and  vice-president  were  fixed  by 
the  Executive  Comimittee.  In  this  case  the  matter  of  these 
salaries  was  referred  to  a  sub-committee  composed  of  Hon. 
Chauncey  M.  Depew  and  Valentine  P.  Snyder.  The  following  is 
a  copy  of  the  recommendation  of  this  sub-committee : 

"  THE  EQUITABLE  ASSURANCE  SOCIETY  OF  THE  UNITED  STATES, 
120  BROADWAY,  NEW  YORK,  December  22,  1902. 
VICE-PRESIDENT'S  OFFICE. 

The  undersigned,  a  committee  appointed  by  the  Executive  Com- 
mittee, for  the  purpose  of  acting  upon  the  salaries  of  the  officers 
of  the  company,  have  made  a  careful  examination  of  the  subject 
and  decide,  that  in  view  of  the  greatly  increased  labor  and 
responsibility  upon  the  executive  officers,  that  the  salaries  of  the 
President  and  Vice-President  be  increased  $25,000  per  annum  from 
and  after  January  1, 1905. 

CHAUNCEY  M.  DEPEW, 
V.  P.  SNYDER." 

Mr.  Snyder  says  all  he  remembers  of  the  transaction  is  that 
one  day  when  the  members  of  the  Executive  Committee  were  at 
lunch  in  the  Society's  dining-room  Senator  Depew  placed  a  paper 
before  him  and  asked  Mm  to  sign  it,  and  he  did,  and  that  he 
thought  it  recommended  the  increase  of  Mr.  Hyde's  salary  only. 
The  evidence  shows  that  President  Alexander  did  not  ask  for  an 
increase,  but  that  Mr.  Hyde  did,  and  in  order  that  his  salary 
might  be  raised  the  advance  in  the  president's  salary  was  made 
necessary.  It  should  be  borne  in  mind  that  in  addition  to  this 
salary  which  Mr.  Hyde  has  been  drawing  from  the  Equitable 
Society  he  has  been  drawing  a  salary  of  $12,000  from  the 


45 

Equitable  Trust  Company,  $2,500  from  the  Commercial  Trust 
Company  of  Philadelphia,  $12,500  from  the  Mercantile  Trust 
Company,  and  fl,000  from  the  Mercantile  Safe  Deposit  Com- 
pany; all  told  |128,000  a  year,  although  he  has  spent  several 
months  in  each  year  in  Europe. 

In  passing  it  may  not  be  inappropriate  to  mention  a  little 
matter  of  directors'  and  committes'  fees.  Mr.  Mclntyre  says  he 
is  a  director  in  thirteen  corporations.  A  director  in  the  Equit- 
able Society  who  is  on  the  Executive  Committee  receives  f 25  for 
each  meeting,  of  which  there  are  three  each  week,  amounting  to 
|3,900  a  year.  He  is  on  other  committees,  which  all  told  make 
his  fees  from  the  Society  $4,480.  His  committee  fees  from  six  of 
the  Society's  affiliated  companies  (three  of  them  in  the  Equitable 
Building,  and  all  in  New  York  City),  amount  to  $3,960,  making 
a  total  of  $8,440  from  the  Society  and  its  affiliated  companies. 
The  ordinary  policyholder,  I  imagine,  would  consider  this  a 
pretty  fair  income. 

Mr.  Hyde  is  a  director  in  about  fifty  corporations  and  if  he 
attends  to  his  duties  as  well  as  he  represents,  his  committee  and 
director  fees  would  amount  to  many  thousands  of  dollars  per 
annum. 

The  Society  has  disbursed  the  following  totals  in  fees  to 
directors  and  members  of  committees: 

1900  . . . $32,670  00 

1901  35,390  00 

1902  38,805  00 

1903  43,805  00 

1904  44,995  00 

1905  (to  date) 11,200  00 

Mr.  Hyde  prepared  a  verified  statement  of  his  directorships  in 
different  corporations,  with  the  dates  of  his  elections.  It 
appears  from  this  paper  that  he  is  a  member  of  the  Boards  of 
a  number  of  the  great  railroad  corporations  of  the  country,  in 
the  most  of  which  he  states  he  is  not  a  stockholder.  Mr.  Hyde 


46 

is  not  an  expert  in  railroad  matters,  having  had  no  training  in 
that  direction,  has  had  no  wide  experience  and  has  never  demon- 
strated his  ability  as  a  business  man,  and  consequently  I  con- 
clude that  the  great  railroad  managers  did  not  put  him  on  the 
directorate  of  their  companies  for  either  of  these  reasons,  and 
the  inference  is  that  he  has  been  put  on  these  Boards  for  the 
reason  that  he  was  the  financial  head  of  a  great  insurance  .cor- 
poration whose  assets  were  so  large  and  whose  ready  money  was 
always  available  for  the  purchase  of  securities  which  these 
great  corporations  are  largely  in  the  market  to  sell. 

EXPENSES  OF  OFFICERS. 

Mr.  Hyde's  expense  account  appears  as  follows :  1900, 
$7,176.82;  1901,  $6,971.89;  1902,  $2,588.24;  1903,  $20,517.09;  1904, 
$15,285.70.  These  are  several  times  larger  than  those  of  any 
other  officer.  He  did  not  submit  any  itemized  statements. 
These  lump  sums  were  paid  on  his  vouchers.  That  seems  to  have 
been  his  practice  for  when  he  gave  the  celebrated  Cambon  dinner 
he  drew  from  the  Society's  treasury  $12,800  to  pay  the  bill  with 
no  other  authority  than  his  own. 

PENSION. 

An  examination  of  the  Society's  pension  list  discloses  the  fact 
that  Mrs.  Hyde,  mother  of  the  Vice-President,  has  been  drawing 
a  pension  of  $25,000  a  year  since  1900.  If  Mr.  Henry  B.  Hyde, 
who  certainly  worked  hard  to  build  up  the  Society,  had  died  poor 
or  comparatively  poor,  possibly  no  objection  should  be  raised  to 
this  pension.  But  it  is  generally  understood  that  he  left  a  large 
estate,  and  his  son,  James  H.  Hyde,  from  the  evidence  produced 
in  this  inquiry,  has  large  holdings  of  valuable  stocks  and  other 
securities.  It  does  not  appear  clearly  by  whom  this  pension  was 
authorized,  nor  is  any  reason  given  why  it  should  be  allowed. 
I  doubt  very  much  if  the  officers  of  the  'Society  have  any  legal 
right  to  give  away  to  Mrs.  Hyde  this  money,  which  rightfully 
belongs  to  the  policyholders. 


47 

The  following  is  a  schedule  of  the  fees  paid  attorneys  in  New 
York  by  the  Society  during  the  past  five  years : 


Alexander  &  Colby 

15  000 

15  000 

24  000 

24  000 

°4  000 

°4  000 

Chauncey  M  Depew 

20  000 

20  000 

20  000 

20  000 

9Q  000 

20  000 

C  g  Alexander  

12  000 

12  000 

D  B  Hill  

....    7,500 

5,000 

5,000 

5  000 

5  000 

5  000 

Elihu  Root 

10  000 

95  000 

Several  smaller  fees  have  been  paid  during  these  years  which  are 
not  on  this  schedule. 

The  following  is  a  schedule  of  fees  paid  to  attorneys  outside  of 
the  State  of  New  York  during  the  last  five  years : 

1900 147,666  50 

1901  60,257  02 

1902  31,121  32 

1903 62,652  53 

1904  30,965  11 


The  bills  for  services  of  the  attorneys  who  were  retained  by  the 
President  of  the  Equitable  Society,  in  the  matter  in  relation  to 
the  amended  charter  and  the  litigation  which  followed  it,  have 
not  yet  been  presented,  but  will  be  a  charge  upon  the  Society. 

Why  were  these  officers  during  a  long  series  of  years  permitted 
again  and  again  to  violate  their  obligations,  and  perpetrate  so 
many  wrongs  against  the  interests  of  the  Society  for  their  own 
profit  ?  A  little  consideration  of  the  organization  of  the  company 
and  its  methods  of  doing  business  will  explain.  Henry  H.  Hyde 
was  an  able,  far-seeing  insurance  man.  The  fifty-two  directors 
whom  he  selected  in  the  first  instance  were  respectable  men  of 
prominence  in  their  several  communities.  This  larger  number 
was  not  necessary  for  the  transaction  of  business,  but  they  were 
useful  to  give  the  young  society  tone  and  character.  The  same 
class  of  men  was  continued  as  directors  until  the  present  time, 
and  a  little  analysis  of  their  personnel  and  interests  may  not  be 
inappropriate. 


43 

The  following  thirty-six  directors  were  a  few  months  ago 
qualified  by  Hyde  stock,  viz. :  Louis  Fitzgerald,  William  A.  Whee- 
lock,  H.  C.  Deming,  Cornelius  N.  Bliss,  George  H.  Squire,  Charles 
S.  Smith,  V.  P.  Snyder,  C.  Ledyard  Blair,  Bray  ton  Ives,  M.  E. 
Ingalls,  A.  J.  Cassatt,  E.  H.  Harriman,  Jacob  H.  Schiff,  James  J. 
Hill,  T.  Jefferson  Coolidge,  John  Jacob  Astor,  Sir  William  Van 
Home,  Gage  E.  Tarbell,  Marvin  Hughitt,  Henry  C.  Frick,  M. 
Hartley  Dodge,  John  A.  Stewart,  Alfred  G.  Vanderbilt,  Levi  P. 
Morton,  D.  O.  Mills,  Kobert  T.  Lincoln,  George  J.  Gould,  John 
Sloane,  George  T.  Wilson,  Thomas  T.  Eckert,  William  H.  Mc- 
Intyre,  Samuel  M.  Inman,  H.  C.  Haarstick,  David  H.  Moffatt, 
Joseph  T.  Low,  August  Belmont. 

The  following  four  directors  were  qualified  by  Alexander  and 
Jordan  stock,  viz :  James  B.  Forgan,  H.  Rogers  Winthrop,  Bradish 
Johnson,  and  Alvin  W.  Krech. 

To  qualify  a  director  Mr.  Hyde  assigned  him  five  shares  of  stock 
and  immediately  took  a  re-assignment  in  blank  and  an  order  that 
the  dividends  on  that  stock  be  paid  to  Mr.  Hyde.  In  the  stock 
book  those  five  shares  appear  in  the  name  of  the  director.  In  the 
dividend  order  book  an  order  is  entered  that  the  dividends  be  paid 
to  Mr.  Hyde.  The  director,  therefore,  has  no  beneficial  interest 
in  the  stock  which  appears  in  his  name.  The  charter  provides 
that  each  director  "  shall  be  a  proprietor  of  at  least  five  shares 
of  said  capital  stock."  The  legal  question  presented  here  is  for 
the  lawyers  and  courts  to  decide,  tat  in  my  judgment  this  is  not 
the  kind  of  qualification  contemplated  in  the  charter. 

The  ten  directors  who  actually  owned  stock  in  their  own  right 
were  as  follows : 

James  W.  Alexander,  James  H.  Hyde,  Chauncey  M.  Depew, 
Thomas  D.  Jordan,  Charles  B.  Alexander,  T.  DeWitt  Cuyler,  H. 
M.  Alexander,  J.  F.  DeNavarro,  William  Alexander,  John  J. 
McCook. 

There  were  two  vacancies. 

The  Executive  Commitee  for  the  years  1903  and  1904  were, 
James  H.  Hyde,  Chairman,  James  W.  Alexander,  William  A. 


40 

Wheelock,  Chauncey  M.  Depew,  Valentine  P.  Snyder,  H.  C.  Dem-, 
ing,  Thomas  D.  Jordan,  and  George  H.  Squire. 

Of  these,  Mr.  Alexander  was  drawing  a  salary  of  $100,000  per 
annum;  Mr.  Depew  a  salary  of  $20,000  per  annum;  Mr.  Jordan 
a  salary  of  $30,000  per  annum;  Mr.  Squire  a  salary  of  $15,000 
per  annum;  Mr.  Snyder  was  President  of  the  National  Bank  of 
Commerce,  an  affiliated  company. 

Mr.  Deming  was  President  of  the  Mercantile  Trust  Company 
of  which  the  Society  own  the  stock  control.  Therefore,  all  of 
these  associate  members  except  possibly  Mr.  Snyder  were  abso- 
lutely dependent  upon  the  Chairman,  Mr.  Hyde,  for  their  sal- 
aries, for  he  dominated  the  Society  by  reason  of  his  stock  con- 
trol. Mr.  Wheelock  was  one  of  Mr.  Hyde's  qualified  directors. 

He  is  an  elderly  gentleman  about  87  years  of  age,  and  is  now 
paralyzed  and  unable  to  do  any  work  or  business.  On  February 
16,  1905,  after  the  internal  dissentions  had  arisen,  the  Board  of 
Directors  undertook  to  infuse  some  new  blood  into  this  com- 
mittee and  made  it  up  as  follows:  James  H.  Hyde,  Chairman; 
James  W.  Alexander,  Gage  E.  Tarbell,  George  T.  Wilson,  Wil- 
liam H.  Mclntyre,  Thomas  D.  Jordan,  W.  A.  Wheelock,  C.  M, 
Depew,  V.  P.  Snyder,  H.  C.  Deming,  A.  W.  Krech,  H.  C.  Frick. 
The  new  men  on  the  committee  are  Gage  E.  Tarbell,  Second 
Vice-President  and  dependent  on  Mr.  Hyde  for  his  position; 
George  T.  Wilson,  Third  Vice-President  and  dependent  on  Mr. 
Hyde  for  his  position;  W.  H.  Mclntyre,  Fourth  Vice-President 
and  dependent  on  Mr.  Hyde  for  his  position;  A.  W.  Krech,  Presi- 
dent of  The  Equitable  Trust  Company  and  dependent  on  Mr. 
Hyde  for  his  position,  for  Mr.  Hyde  and  The  Equitable  Society- 
own  a  majority  of  its  stock.  Mr.  H.  C.  Frick  is  the  only  man 
who  on  the  record  is  not  under  obligations  to  Mr.  Hyde,  and  he 
is  qualified  by  Hyde  stock.  He  was  Chairman  of  the  Committee 
which  submitted  the  Frick  report  and  resigned  from  the  Board 
of  Directors  immediately  thereafter. 

The  Executive  Committee  transacts  all  the  important  business 
of  the  Society.  The  Finance  Committee  is  composed  of  exactly 
the  same  men  as  the  Executive  Committee  with  one  additional 


50 

^director,  viz. :  Mr.  Jacob  H.  Schiff,  senior  member  of  the  firm  of 
Kuhn,  Loeb  &  Co.,  which  has  sold  to  the  Equitable  Society,  accord- 
ing to  its  reports,  since  January  1,  1900,  $47,522,000  of  bonds 
and  |1,780,000  of  stock. 

The  duties  of  the  Finance  Committee  are  perfunctory. 

The  Executive  Committee  votes  to  buy  or  sell  real  estate,  make 
leases,  raise  salaries,  buy  or  sell  bonds  or  stocks.  Those  transac- 
tions are  closed  before  they  reach  the  Finance  Committee.  The 
same  men  as  members  of  the  Finance  Committee  approve  their 
action  as  members  of  the  Executive  Committee.  The  only  power 
they  have  is  to  advise  that  the  bonds  or  stocks  already  bought 
^and  paid  for  be  sold  at  a  profit  or  loss  according  to  the  condition 
of  the  market.  Of  course  they  cannot  repudiate  or  revise  ordi- 
nary contracts  which  are  closed. 

j  The  Board  of  Directors  at  the  beginning  of  this  year  was  com- 
posed of  prominent  and  distinguished  men,  who  are  successful 
in  their  various  fields  of  activity.  But  most  of  them  paid  little 
attention  to  their  duties  and  obligations  as  trustees  of  this  very 
important  trust.  The  annual  and  quarterly  meetings  were  not 
largely  attended.  They  seem  to  have  taken  no  very  active  interest 
in  the  affairs  of  the  Society.  The  mildest  thing  which  can  be 
said  of  them  is  that  they  were  indifferent  and  careless  in  the  dis- 
charge of  their  obligations  and  responsibilities. 

THE  EXECUTIVE  OFFICERS. 

..  ,  MR.  JAMES  W.  ALEXANDER. 

President  Alexander  has  been  connected  with  this  Society  for 
almost  a  life  time.  He  has  heretofore  had  the  respect  and  con- 
fidence of  all  who  knew  him.  In  his  testimony  he  stated  that 
he  was  not  conscious  of  any  wrong-doing  and  that  he  was  led 
to  participate  in  the  syndicate  transactions  of  James  H.  Hyde 
and  Associates  by  Mr.  Hyde  without  giving  the  matter  such  seri- 
ous consideration  as  it  deserved.  The  uncontroverted  testimony 
was  that  he  was  a  participant  in  them  and  accepted  his  share 
.of  the  profits.  He  executed  the  leases  that  proved  to  be  so  detri- 
mental to  the  Society's  interests.  He  was  cognizant  of,  and  ap- 


51 

proved  the  various  subsidiary  undertakings  which  we  have  criti- 
cised and  by  reason  thereof  has  failed  to  meet  the  obligations 
imposed  upon  him  as  chief  officer  of  the  Society,  and  it  is  an 
open  question  whether  he  is  not  disqualified  under  section  36 
of  the  Insurance  Law  from  hereafter  holding  any  office  in  a  life 
insurance  company,  as  well  as  all  the  other  officers  and  directors 
who  participated  in  these  unlawful  transactions. 

MR.  JAMES  H.  HYDE. 

Mr.  Hyde,  on  the  death  of  his  father,  became  the  owner  of  502 
shares  of  the  Equitable  Society  stock  and  acquired  35  additional 
shares,  making  a  good  working  majority.  He  knew  this  and 
others  were  quickly  made  aware  of  it.  He  did  not  hesitate  to 
extract  from  the  Society's  treasury  f 352,500  for  his  stock  in  the 
Missouri  Safe  Deposit  Company,  made  valuable  only  by  the  out- 
rageous leases  with  the  parent  Society.  He  permitted  the  Society 
to  lose  heavily  in  its  business  transactions  with  the  Commercial 
Trust  Company  of  which  he  is  a  salaried  officer  and  a  large  stock- 
holder. He  was  very  active  in>  promoting  the  transactions  by 
which  the  present  Equitable  Trust  Company  was  developed,  and 
he  thereby  profited  largely  and  became  Vice-President  at  a  liberal 
salary.  By  reason  of  the  Equitable  Society's  control  of  the  Mer- 
cantile Trust  Company  he  became  Vice-President  of  that  institu- 
tion with  a  good  salary.  He  has  been  accustomed  to  buy  large 
amounts  of  securities  and  involve  the  Society  in  other  important 
ventures  without  authority.  He  has  carried  large  holdings  of  the 
Society's  stocks  in  his  own  name.  He  exacted  salaries  out  of  all 
proportion  to  his  age,  ability  or  the  value  of  his  services,  and 
caused  those  of  his  immediate  friends  and  favorites  to  be  unduly 
advanced.  He  is  mainly  responsible  for  the  extravagant  salaries 
allowed  many  executive  officers.  He  has  been  accustomed  to  draw 
large  sums  for  expenses  on  his  own  unitemized  vouchers.  In  fact, 
he  has  not  seemed  to  consider  himself  accountable  to  anyone  for 
the  expenditure  of  the  Society's  funds.  He  introduced  and  con- 
ducted the  syndicate  transactions1  and  involved  others  with  him- 
self. He  forced  himself  on/  boards  of  direction,  and  into  business 


52 

relations  with  prominent  men,  by  the  aggressive  assertion  of  his 
stock  control  of  the  Equitable  Society,  and  by  those  means  he 
gradually  assumed  dominition  of  the  Society's  affairs  until  the 
presidency  was  reduced  to  a  position  of  secondary  importance. 
His  authority  continued  to  increase  and  he  proceeded  to  use  the 
Society  and  its  assets  more  and  more  as  if  they  were  his  own, 
until  he  was  checked  by  the  demand  for  mutualization  and  his 
retirement.  The  policyholders  are  under  great  obligations  to  Mr. 
Alexander  and  the  other  executive  officers  for  taking  this  step. 

MR.  GAGE  E.  TARBELL. 

The  following  charges  have  been  made  against  Mr.  Tarbell  by 
some  of  the  other  executive  officers : 

That  he  has  been  extravagant  in  the  administration  of  the 
Agency  Department. 

That  he  has  encouraged  or  connived  at  rebating. 

That  during  several  months  last  past  he  has  been  allowing  to 
agents  four  dollars  a  thousand  for  new  insurance  in  addi- 
tion to  the  regular  percentage,  without  consulting  the  Executive 
Committee. 

That  just  before  this  controversy  he  received  from  the  Society 
|135,000  cash  in  settlement  of  his  claim  for  commuted  commis- 
sions in  the  Chicago  agency. 

That  he  encouraged  insubordination  by  inducing  executive  offi- 
cers and  heads  of  departments  and  even  clerks  to  sign  a  petition 
against  the  Vice-President,  and  that  he  has  been  instrumental  in 
circulating  literature  criticising  and  slandering  certain  officers  of 
the  Society,  in  direct  violation  of  a  resolution  of  the  p]xecutive 
Committee. 

On  these  charges  I  find  that  in  the  year  1900  a  new  system  was 
inaugurated,  by  which  the  percentage  of  first  premiums  on  new 
business  allowed  to  agents  was  reduced  from  sixty  to  fifty  per 
cent.  This  made  it  very  difficult  for  the  field  agents  to  compete 
with  those  of  other  large  companies,  who  allowed  their  agents 
larger  percentages,  and  therefore  the  advances  to  them  were  in- 
creased in  order  that  they  might  live  and  continue  in  the  service 


53 

of  the  Society.  I  doubt  if  the  increased  advances  amount  to  as 
much  as  10  per  cent,  of  the  first  premiums  on  new  business  saved, 
and  therefore  the  Society  is  not  a  loser. 

Mr.  Tarbell  swears  that  he  has  not  even  connived  at  rebating, 
but  that  on  the  contrary  he  has  always  denounced  and  tried  to 
stop  it,  and  no  evidence  has  been  adduced  in  support  of  this  alle- 
gation by  those  who  made  it. 

Mr.  Tarbell  admits  that  during  the  last  few  months  he  has  been 
allowing  to  agents  four  dollars  per  thousand  on  new  insurance  in 
addition  to  the  regular  percentage,  and  says  this  was  done  after 
consultation  with,  and  approval  of,  the  President.  It  does  not 
appear  to  be  a  bonus  in  the  ordinary  sense  of  that  word,  but  an 
extra  compensation  to  sustain  the  agency  force  during  these  try- 
ing times.  That  may  have  been  an  error  in  judgment,  but  there 
is  much  excuse  for  Mr.  Tarbell  in  striving  to  keep  up  the  busi- 
ness of  the  Society  and  retain  its  agents. 

It  appears  that  the  sum  of  f  135,000  paid  Mr.  Tarbell,  was  com- 
puted in  the  Auditor's  department  as  the  amount  due  him  for 
his  commuted  commissions  and  no  evidence  has  been  adduced 
showing  that  he  was  over-paid. 

Mr.  Tarbell  denies  that  he  was  instrumental  in  or  encouraged 
the  circulation  of  literature  in  criticism  of  other  officers  of  the 
Society,  and  no  substantial  evidence  appears  in  support  of  this 
or  the  other  charges  preferred  against  him. 

INVESTMENTS. 

I  think  it  important  that  the  next  Legislature  should  take  into 
consideration  the  question  of  the  investment  of  the  funds  of  life 
insurance  companies  and  establish  a  standard  of  investment.  As 
to  just  how  far  or  to  what  extent  they  should  be  restricted  in 
their  investments  I  am  not  prepared  to  offer  an  opinion  at  this 
time.  Doubtless  that  question  will  be  studied  and  thought  out 
by  the  time  of  the  next  annual  meeting  of  the  Legislature.  There 
can  be  no  question,  however,  of  the  wisdom  of  prohibiting  the 
investment  of  the  funds  of  life  insurance  companies  in  subsidiary 
moneyed  and  business  corporations  controlled  by  life  companies, 


54 

which  occasion  the  carrying  of  large  balances  for  the  benefit  of 
those  companies  and  for  the  stockholders  who  are  largely  asso- 
ciated in  the  management  of  the  Society.  The  suggestion  that 
these  large  balances  were  carried  for  the  purpose  of  enabling  the 
Society  to  avail  itself  of  the  opportunity  to  purchase  securities 
at  a  low  price  is  not  sustained  from  the  fact  that  large  balances 
were  carried  during  the  years  1903  and  1904,  when  securities 
could  have  been  purchased  at  a  much  lower  level  or  the  money 
loaned  at  much  higher  rates  than  were  being  paid  by  the  affiliated 
companies.  If  life  insurance  is  to  commend  itself  to  the  people 
to  provide  for  those  who  are  left  behind,  it  is  important  that  the 
business  of  the  insurance  companies  be  conducted  on  strictly 
business  lines  and  that  extravagance  of  management  and  large 
salaries  should  be  reduced  within  proper  limits. 

THE  SOCIETY'S  CONTROL. 

During  the  progress  of  this  investigation  a  change  in  the  stock 
control  of  the  Society  has  been  made,  and  three  trustees  have 
been  empowered  under  a  deed  of  trust  to  partially  mutualize  the 
Society;  that  is,  it  is  provided  that  28  of  the  directors  should  be 
elected  by  the  policyholders  and  24  by  the  stockholders,  with  the 
promise  that  there  would  be  a  reduction  in  the  expenses  of  the 
company,  and  that  the  managers  would  institute  other  reforms 
in  the  management  of  the  Society  which  would  inure  to  the 
benefit  of  the  policyholders.  I  do  not  question  but  what  this 
is  the  honest  intention  of  those  who  have  acquired  the  control 
of  the  stock  of  the  Society.  I  doi  not  think,  however,  that  this 
will  go  far  towards  restoring  the  confidence  of  the  present 
policyholders  or  aid  in  procuring  new  business  for  the  Society. 
In  my  opinion  the  only  thing  that  will  restore  that  confidence 
and  benefit  the  company  will  be  the  elimination  of  stock  con- 
trol, and  what  I  deem  of  equal  importance,  the  elimination  of 
Wall  Street  control.  I  early  came  to  the  opinion  and  so  ex- 
pressed myself  to  the  Legislature  in  the  Department's  annual 
report  this  year,  that  all  the  surplus  accretions  of  this  Society 
beyond  the  seven  per  cent,  dividends  on  the  stock  belong  to  the 


55 

policyholders.  The  Charter  provides  that  the  business  of  the 
Society  should  be  conducted  on  the  mutual  plan,  and  provides 
that  each  policyholder  shall  be  credited  with  an  equitable  share 
of  the  surplus.  And  I  am  confirmed  in  my  opinion  by  an  ex- 
amination of  the  statements  that  were  made  early  in  the  exist- 
ence of  this  Society  to  the  Insurance  Department,  verified  under 
oath  by  the  President  of  the  Society,  that  it  was  a  purely 
mutual  company  and  that  all  its  surplus  should  be  divided  in  an 
equitable  manner  among  the  policyholders,  and  still  further  by 
an  examination  of  the  affidavits  made  on  behalf  of  the  Society 
to  the  Commissioner  of  Taxes  and  Assessments  of  the  City  of 
New  York,  containing  the  statement  that  no  surplus  earnings 
belonged  to  the  stockholders,  and  that  all  the  accumulations  of 
the  Society  are  held  for  the  benefit  of  the  assured  and  are  free 
from  taxation. 

No  superficial  measures  will  correct  the  existing  evils  in  this 
Society.  A  cancer  cannot  be  cured  by  treating  the  symptoms. 
Complete  mutualization  with  the  elimination  of  the  stock,  to  be 
paid  for  at  a  price  only  commensurate  with  its  dividends,  is,  in 
my  opinion,  the  only  sure  measure  of  relief. 

This  report,  with  a  copy  of  the  evidence  taken  on  this  investiga- 
tion, will  be  transmitted  to  the  Attorney-General  for  such  action 
thereon  as  he  may  deem  proper. 

Respectfully  submitted. 


Superintendent  of  Insurance. 


ADDENDA. 


EXHIBIT   I. 

THIS  INDENTURE,  made  the  ninth  day  of  January,  one  thousand 
eight  hundred  and  eighty-three, 

BETWEEN  The  Equitable  Life  Assurance  Society  of  the  United 
States,  a  corporation  organized  and  existing  under  and  by  virtue 
of  the  laws  of  the  State  of  New  York  (hereinafter  designated 
as  lessor),  party  of  the  first  part,  and  The  Mercantile  Safe 
Deposit  Company,  a  corporation  created  under  the  laws  of  the 
State  of  New  York  (hereinafter  designated  as  lessee),  party  of 
the  second  part, 

WITNESSETH,  That  the  said  party  of  the  first  part,  as  lessor, 
does  hereby  lease  unto  the  said  party  of  the  second  part,  and  the 
said  party  of  the  second  part  does  hereby  hire  and  take,  as  lessee, 
the  rooms  shown  on  the  diagrams  hereto  annexed  and  marked 
C  and  D,  respectively,  situated  in  the  basement  of  the  building 
owned  by  the  said  lessor  in  the  City  of  New  York,  situated  on 
Broadway,  Cedar  and  Pine  streets,  and  known  as  the  Equitable 
Building  (which  diagrams  are  made  part  of  this  lease  for  the 
purpose  of  designating  the  premises  in  said  basement  hereby 
leased),  together  with  so  much  of  the  cellar  of  said  Equitable 
Building  as  lies  beneath  the  said  rooms  and  is  shown  on  the  said 
diagram  marked  D,  and  the  vaults  under  the  sidewalks  of  the 
Broadway  and  Cedar  street  sides  of  said  Equitable  Building,  as 
shown  by  said  diagram,  and  also  the  cellar  of  the  building  owned 
by  said  lessor  and  known  as  the  Law  Library  Building,  and  as 
shown  on  said  diagram  marked  D. 

To  HAVE  AND  TO  HOLD  the  said  rooms,  vaults,  cellars  and  prem- 
ises with  the  safes  and  appurtenances  therein  for  the  term  of 
years  to  commence  on  the  first  day  of  July,  one  thousand  eight 
hundred  and  eighty-one,  and  to  end  on  the  first  day  of  January, 
one  thousand  nine  hundred  and  one,  with  the  right  and  privilege 


57 

to  said  lessee,  its  successors  or  assigns,  to  terminate  and  sur- 
render this  lease  at  the  expiration  of  ten  years  from  the  date 
thereof  upon  giving  to  the  lessor  a  previous  notice  in  writing  of 
six  months  of  its  or  their  intention  to  so  terminate  the  same, 

YIELDING  AND  PAYING  therefor  yearly  and  every  year  during 
the  term  hereby  granted  unto  the  said  lessor,  its  successors  or 
legal  representatives,  the  yearly  rent  or  sum  of  fifteen  thousand 
dollars  during  the  whole  term  hereby  granted,  to  wit:  from  the 
first  day  of  July  in  the  year  of  our  Lord  one  thousand  eight 

hundred  and  eighty-one  to  the  first  day  of  January  in  the  year 

»» 

of  our  Lord  one  thousand  nine  hundred  and  one;  and  if  the  net 
amount  received  by  the  lessee  as  rent  or  compensation  for  the 
use  or  hire  of  safes  in  the  great  iron  vaults,  shown  on  the  dia- 
grams A  and  B  hereto  annexed,  upon  the  demised  premises,  which 
shall  be  rented  out  (such  amount  to  be  ascertained  by  deducting 
from  the  whole  amount  so  received  the  total  expenses  of  the  said 
lessee),  shall  amount  to  so  much  in  any  year  of  the  term  hereby 
created  that  one-half  thereof  shall  exceed  fifteen  thousand  dol- 
lars, then  and  in  every  such  case  said  lessee  agrees  to  pay  to 
said  lessor  as  rent  at  the  end  of  such  year  so  much  in  addition 
to  the  said  rent  of  fifteen  thousand  dollars  per  annum  as  shall 
with  the  said  fifteen  thousand  dollars  make  such  rent  for  such 
year  a  sum  equal  to  such  one-half.  It  being  the  intention  and 
agreement  of  the  parties  hereunto,  and  the  said  lessee  hereby 
covenanting  and  agreeing  that  the  said  rent  due  and  payable 
hereby  shall  be  fifteen  thousand  dollars  per  annum  in  any  event, 
and  so  much  more  as  may  be  necessary  with  the  said  fifteen 
thousand  dollars  to  equal  one-half  of  the  net  receipts  by  said 
lessee  from  the  rent  of  safes  in  the  aforesaid  iron  vaults  shown 
on  the  diagrams  marked  A  and  B  after  deducting  the  total 
expenses  of  the  said  lessee,  if  one-half  of  such  net  receipts  shall 
exceed  fifteen  thousand  dollars  per  annum. 

All  the  rent  to  be  paid  in  lawful  money  of  the  United  States 
and  said  fifteen  thousand  dollars  in  quarter  yearly  payments  on 
the  fifteenth  days  of  January,  April,  July  and  October  in  each 
and  every  year  until  the  expiration  of  said  term  at  the  principal 
office  of  the  said  lessor  in  the  City  of  New  York,  the  last  quarter's 


58 

rent  being  payable  fifteen  days  after  the  expiration  of  the  term. 
It  being  understood  and  agreed  that  the  rent  over  and  above 
said  fifteen  thousand  dollars  shall  be  measured  by  the  net  in- 
come, calculated  as  aforesaid  from  the  rental  or  compensation 
for  the  use  or  hire  of  the  said  safes  in  the  aforesaid  iron  vaults 
during  the  year  ending  December  thirty-first  in  each  and  every 
year  respectively  during  the  continuance  of  this  lease,  and  shall 
be  payable  on  the  fifteenth  day  of  January  next  following  for 
each  year  ending  on  said  thirty-first  day  of  December  then  last 

past;  said  payments  when  paid  shall  be  in  full  for  all  rent  to  be 

t* 

paid  to  the  lessor. 

AND  IT  is  HEREBY  UNDERSTOOD  AND  AGREED,  that  if  at  any  time 
or  times  during  the  continuance  of  this  lease  the  said  lessor  shall 
be  of  the  opinion  that  the  expenses  of  the  said  lessee  above  allowed 
to  be  deducted  from  the  rental  of  the  safes  in  the  aforesaid  iron 
vaults  for  the  purpose  of  measuring  the  amount  of  rent  payable 
hereunder  are  too  large,  on  the  demand  of  the  said  lessor  there 
shall  be  appointed  three  arbitrators,  one  to  be  selected  by  the 
said  lessor,  one  by  the  said  lessee,  and  one,  an  umpire,  by  the  two 
persons  so  chosen  as  aforesaid,  whose  duty  it  shall  be  to 
thoroughly  investigate  all  said  expenses  and  outgoings  of  the  said 
lessee  and  who  shall  report  with  all  reasonable  promptitude  what 
action  shall  be  taken  by  the  parties  hereto  with  reference  to  the 
matter.  And  it  is  hereby  expressly  understood  and  agreed  that 
the  decisions  and  recommendations  of  the  said  arbitrators  so 
chosen  shall  be  accepted  and  faithfully  carried  out  by  the  parties 
hereto  without  delay. 

AND  the  said  lessor  for  the  considerations  aforesaid  hereby 
covenants  and  agrees  to  and  with  the  said  lessee,  that  the  said 
lessor  will,  at  its  own  expense  and  charges,  alter,  furnish  and  fit 
up  and  keep  the  same  fitted  up,  cleaned,  painted  and  furnished 
in  a  proper  and  suitable  manner  as  will  most  promote  the  business 
of  the  said  lessee,  the  rooms  herein  and  hereby  leased  and  will, 
from  time  to  time  during  the  continuance  of  this  lease,  erect  and 
fit  up  at  the  expense  of  the  said  lessor  as  many  safes  and  of  such 
description  as  may  be  necessary  for  the  use  of  the  said  lessee  in 


59 

its  business.  And  will  also  alter,  furnish  and  fit  up  and  keep  the 
same  furnished,  cleaned,  painted  and  fitted  up  in  the  best  manner 
such  portions  of  the  cellars  and  of  the  vaults  under  the  sidewalks 
as  shown  on  the  diagram  hereto  annexed  marked  D  for  the  use 
of  said  lessee  in  such  a  manner  as  shall  be  required  by  the  general 
business  of  said  lessee  when  called  upon  so  to  do  by  said  lessee. 
And  all  repairs  shall  be  at  the  expense  of  the  said  lessor,  not 
however  including  the  refitting  locks  throughout  the  premises. 

It  being  understood  that  the  foregoing  provisions  as  to  the 
amount  of  rental  are  intended  only  as  a  method  of  determining 
the  amount  of  rent  hereby  reserved,  and  that  this  instrument  shall 
not  be  construed  as  in  any  wise  creating  a  partnership  between 
the  parties  hereto,  nor  as  giving  to  the  lessor  any  interest  in  the 
business  of  the  lessee  or  any  part  thereof,  nor  as  giving  the  lessor 
any  specific  lien  upon  or  right  to  the  receipts  from  the  rents  of 
safes  or  any  part  thereof. 

The  above  lease  is  upon  the  following  conditions,  all  and  every 
one  of  which  the  said  lessee  for  itself,  its  successors  and  assigns, 
covenants  and  agrees  to  and  with  the  said  lessor,  its  successors 
and  assigns,  to  keep  and  perform. 

First.  That  the  lessee  will,  from  time  to  time,  during  the  said 
term  in  good  faith  and  diligently  prosecute  the  business  of  rent- 
ing out  safes  upon  the  demised  premises  to  such  extent  as  the 
premises  afford  suitable  room  for  and  as  there  shall  be  demand 
for  and  at  the  best  attainable  rents. 

Second.  In  case  of  the  non-payment  of  the  said  rent  at  the 
said  times  and  place,  or  in  case  the  said  lessee  shall  make  default 
in  the  performance  of  any  of  the  other  covenants  and  conditions 
herein  contained  on  its  part  to  be  performed  or  fulfilled,  or  the 
said  premises  shall  be  deserted  or  vacated,  that  said  lessor  shall 
have  the  right  to  re-enter  upon  the  demised  premises  either  by 
force  or  otherwise  without  being  liable  to  any  prosecution  there- 
for, and  thenceforth  to  have  and  to  hold  the  same  as  of  its  first 
and  former  estate  and  therefrom  to  terminate  this  lease. 

Third.  Said  lessee  shall  quit  and  surrender  said  premises  at 
the  end  of  said  term  or  the  termination  of  anv  renewal  of  the  said 


GO 

lease  in  as  good  condition  as  the  reasonable  use  thereof  will  per- 
mit, and  all  alterations,  additions  or  improvements,  including 
office  furniture,  shall  be  the  property  of  the  said  lessor  and  shall 
remain  upon  and  be  surrendered  with  the  premises  as  a  part 
thereof  at  the  termination  of  this  lease,  whether  such  termination 
be  by  lapse  of  time  or  otherwise,  without  disturbance,  molesta- 
tion or  injury. 

Fourth.  If  during  the  term  of  this  lease  the  said  Equitable 
Building  or  the  premises  hereby  leased  be  injured  by  fire  or 
otherwise  so  as  to  interfere  with  the  business  of  the  said  lessee 
the  said  lessor  agrees  to  "restore  the  same  and  if  the  said  injury 
is  caused  by  the  lessor  or  its  servants  the  lessor  agrees  to  allow 
such  damages  to  the  lessee  as  it  shall  have  suffered  in  conse- 
quence of  such  interference — the  amount  of  such  damages  to  be 
determined  by  arbitration  if  not  agreed  upon  by  the  parties 
hereto,  their  successors  or  assigns. 

In  case  the  said  Equitable  Building  shall  be  totally  destroyed 
by  fire  and  said  lessor  shall  not  rebuild  or  replace  said  building, 
then  and  in  such  case  this  lease  and  all  rights  of  the  parties 
under  the  isame  shall  cease  and  terminate.  But  in  case  of  such 
total  destruction  if  the  said  lessor  shall  rebuild  or  replace  said 
building  it  will  if  desired  by  the  lessee,  its  successors  or  assigns, 
restore  the  said  leased  premises  to  the  same  condition  as  at  the 
time  of  such  destruction  and  when  restored  this  lease  shall  con- 
tinue in  full  force  until  the  end  of  the  term  herein  provided  for, 
but  no  rent  shall  be  paid  by  the  lessee  during  the  period  between 
the  date  of  such  destruction  and  the  time  when  such  leased 
premises  shall  be  restored  as  herein  provided. 

Fifth.  Said  lessor  will  keep  in  the  hereby  leased  premises  a 
warming  apparatus  affording  sufficient  heat  for  use  from  the 
tenth  day  of  October  in  each  year  of  this  lease  to  the  twentieth 
day  of  May  following,  and  will  furnish  sufficient  gas  or  electric 
light  or  other  suitable  means  for  lighting  said  leased  premises, 
and  will  cause  said  premises  (excepting  the  vaults  and  places  of 
deposit)  to  be  cleaned  and  properly  cared  for  by  the  Janitor  of 
its  building. 


61 

Sixth.  And  it  is  further  agreed  that  any  difference  which 
may  arise  as  to  the  construction  of  this  lease  or  any  part  thereof 
shall  be  referred  to  the  decision  of  three  persons  to  be  selected 
as  follows — one  by  the  said  lessor,  one  by  the  said  lessee  and  an 
umpire  to  be  selected  by  the  said  two  persons  choisen  as  afore- 
said by  the  parties  hereto — the  decision  of  the  said  three  persons 
or  if  they  shall  not  all  agree,  of  a  majority  of  them,  shall  be 
rendered  with  reasonable  promptitude  and  shall  be  final  and 
conclusive  upon  the  parties. 

Seventh.  It  is  further  understood  and  agreed  that  there  shall 
be  a  monthly  statement  rendered  by  the  said  lessee  to  the  said 
lessor,  which  shall  give  a  full  statement  of  the  number  of  safes 
under  rental  and  the  amount  of  income  derived  from  the  rental  or 
compensation  for  the  use  of  the  safes  in  the  two  great  vaults 
aforesaid,  and  the  total  expenses  calculated  as  hereinbefore  pro- 
vided to  be  deducted  in  measuring  the  rent.  This  statement  to 
be  made  out  and  written  upon  a  blank  to  be  furnished  by  the  said 
lessor. 

Eighth.  And  the  said  lessee  further  agrees  that  said  lessee  will 
at  all  reasonable  times  give  information  with  regard  to  such  por- 
tion of  its  affairs  as  will  enable  said  lessor  to  be  fully  cognizant 
of  its  rights  in  the  premises. 

Ninth.  It  is  understood  that  the  corporate  existence  of  the 
said  lessee  will  terminate  in  the  year  one  thousand  nine  hundred 
and  twenty-five,  but  it  is  the  desire  and  intention  of  both  parties 
to  these  presents  that  there  should  be  a  renewal  and  continuance 
of  such  corporate  existence,  either  by  such  legislation  as  will 
secure  such  continuance,  or  in  default  of  such  legislation  that  a 
new  corporation  should  be  formed  having  the  same  or  similar 
powers  and  franchises  as  are  now  held  by  the  lessee,  and  which 
shall  become  the  successor  in  interest  of  said  lessee,  and  that  the 
said  leased  premises  should  continue  to  be  used  for  the  purposes 
hereinbefore  specified  for  a  further  period  of  fifty  years  from  the 
termination  of  this  lease. 

AND  the  said  lessor  does  hereby  covenant  and  agree  to  and  with 
the  said  lessee,  that  in  case  the  corporate  existence  of  the  said 


62 

lessee  shall  be  lawfully  renewed  or  continued  for  an  additional 
period  of  fifty  years,  or  if  a  corporation  shall  be  formed  at  or 
before  the  time  the  corporate  existence  of  said  lessee  shall 
terminate,  which  shall  succeed  to  or  be  the  assignee  of  the  re- 
mainder of  the  term  hereby  granted,  and  shall  also  possess  the 
same  or  similar  rights,  powers  or  franchises  as  are  now  possessed 
by  the  said  lessee,  and  said  lessee  or  said  new  corporation  shall 
elect  or  take  a  renewal  or  continuance  of  this  lease  and  a  new 
lease  for  an  additional  period  of  fifty  years  upon  the  same  terms, 
conditions  and  agreements  as  are  herein  contained,  then  and  in 
such  case  the  said  lessor  will  execute  to  said  lessee  or  its  assignee 
or  successor  a  new  lease  of  said  premises  hereby  lea.sed  for  such 
additional  term  of  fifty  years,  upon  the  same  rents,  covenants  and 
agreements  as  are  herein  contained. 

Tenth.  It  is  the  intention  of  both  the  parties  to  this  lease  that 
the  premises  hereby  demised,  shall  after  the  expiration  of  the 
period  of  the  new  or  continued  lease  provided  for  in  the  ninth  sub- 
division hereof  be  again  leased  to  the  lessee  or  its  assignee  or 
successor  in  interest  for  an  additional  period  of  fifty  years,  pro- 
vided the  said  lessee  or  its  successor  in  interest  or  assignee  shall 
be  in  law  capable  of  taking  such  renewed  lease. 

AND  IT  is  MUTUALLY  AGREED  by  and  between  the  parties  to  these 
presents  that  if  said  lessee  or  its  assignee  or  successor  in  interest 
being  so  capable  of  taking  such  lease,  shall  desire  such  new  or 
further  lease  of  said  premises,  and  the  lessor  and  said  lessee  or 
its  assignee  or  successor  shall  not  be  able  to  agree  upon  the  terms 
thereof,  then  on  the  demand  of  said  lessee  or  its  assignee  or  suc- 
cessor there  shall  be  appointed  three  arbitrators,  one  to  be  selected 
by  the  said  lessor,  one  by  -said  lessee  or  its  successor  and  one  an 
umpire  by  the  two  persons  so  chosen  as  aforesaid,  who  shall 
decide  what  action  shall  be  taken  by  the  said  parties  in  reference 
to  the  matter.  And  it  is  hereby  expressly  understood  and  agreed 
that  the  decision  of  the  said  arbitrators  so  chosen,  or  the  decision 
of  any  two  of  them  if  all  three  are  unable  to  agree,  shall  be  ac- 
cepted and  faithfully  carried  out  by  the  said  lessor  and  by  said 
lessee  or  its  said  successor  in  interest. 


63 

Eleventh.  IT  is  MUTUALLY  AGREED  by  and  between  the  parties 
to  these  presents  that  upon  the  final  termination  of  this  lease,  or 
of  any  renewal  or  continuance  thereof  or  of  any  new  lease  made 
in  pursuance  of  the  provisions  herein  contained  whether  said 
termination  shall  arise  from  a  termination  by  lapse  of  time  or 
by  a  surrender  thereof  as  herein  provided  for,  the  said  lessor 
shall  purchase  from  said  lessee,  its  successors  in  interest  or 
assignee,  the  good  will  of  the  business  of  said  lessee,  its  suc- 
cessors or  assignee,  at  said  premises  and  shall  pay  therefor  such 
sum  as  shall  be  then  mutually  agree  upon  by  the  parties  in 
interest  at  that  time.  And  in  case  said  sum  cannot  be  so 
agreed  upon  then  the  same  shall  be  fixed  and  determined  by 
arbitration,  the  arbitrators  to  be  selected  in  the  same  manner 
as  is  hereinbefore  provided  for  in  case  of  failure  of  the  parties 
to  agree,  and  the  decision  of  said  arbitrators  or  of  a  majority 
of  them,  if  all  three  shall  not  agree,  shall  be  final  and  shall  be 
accepted  as  binding  on  such  parties  and  the  lessor  shall  pay  to 
the  lessee,  its  successors  in  interest  or  assignee,  the  sum  so 
determined  by  said  arbitrators  as  the  value  of  such  good  will. 
Or  if  said  lessee  shall  demand  a  farther  continuance  of  said 
lease,  that  the  terms  of  the  same  shall  be  settled  by  arbitration 
in  like  manner. 

IN  WITNESS  WHEREOF  the  said  lessor  has  caused  its  cor- 
porate seal  to  be  hereunto  affixed,  and  these  presents 
to  be  signed  by  its  Vice  President  and  Secretary,  and 
the  said  lessee  has  caused  its  corporate  seal  to  be 
hereunto  affixed  and  these  presents  to  be  signed  by 
its  President  and  Secretary,  the  day  and  year  first 
herein  written.  In  duplicate. 

(Signed)         THE  EQUITABLE  LIFE  ASSURANCE 

SOCIETY  OF  THE  U.  S. 
by  JAMES  W.  ALEXANDER,  Vice-President. 
(SEAL)  W.  ALEXANDER,  Secretary. 

(Signed)    THE  MERCANTILE  SAFE  DEPOSIT  CO. 

LYMAN  RHOADES,  President. 
(SEAL)  E.  M.  BILLINGS,  Secretary. 


EXHIBIT  II. 

THIS  INDENTURE,  made  the  first  day  of  January,  in  the  year 
eighteen  hundred  and  eighty,  between  the  Equitable  Life  Assur- 
ance Society  of  the  United  States  (a  corporation  created  under 
the  laws  of  the  State  of  New  York)  hereinafter  designated  as  the 
Lessor,  party  of  the  first  part,  and  the  Equitable  Safe  Deposit 
Company  (a  corporation  duly  established  under  the  laws  of  Mas- 
sachusetts, and  having  its  usual  place  of  business  in  Boston,  in 
said  Commonwealth)  hereinafter  designated  as  the  Lessee,  party 
of  the  second  part : 

1.  WITNESSETH  i     That    in    consideration    of    the    covenants, 
herein  contained,  on  the  part  of  the  said  party  of  the  second  part, 
and  its  representatives,  to  be  kept  and  performed,  the  said  party 
of  the  first  part  doth  hereby  grant,  demise  and  lease  unto  the  said 
party  of  the  second  part,  its  successors  and  assigns,  the  rooms 
numbered  4  and  5,  and  the  vaults,  fixtures  and  furniture  therein, 
in  the  basement  and  cellar  stories  of  the  building  known  as  the 
Equitable  Life  Assurance   Society's  Building,   situated   on   the 
southeast  corner  of  Milk  and  Devonshire  streets,  and  other  prem- 
ises adjoining  thereto,  in  the  City  of  Boston  and  Commonwealth 
of  Massachusetts,  being  the  portion  marked  red  on  the  annexed 
diagrams  marked  A  and   B,  and  the  said  adjoining  premises 
marked  C  respectively;  (that  marked  C  being  the  cellar  and  first 
and  second  stories  of  the  building  Nos.  7  and  9  Federal  street, 
belonging  to  Charlotte  A.  Johnson  and  adjoining  the  Equitable 
Building,  and  subject  to  the  lease  made  to  The  Equitable  Life 
Assurance  Society  by  the  said  Charlotte  A.  Johnson;)  to  be  used 
for  the  purposes  of  the  corporation  and  for  similar  purposes ;  with 
the  right  to  use,  free  of  charge,  in  common  with  others,  the  ele- 
vators in  said  building,  and  the  water  closets  on  the  said  premises. 

2.  And  the  Lessor  covenants  and  agrees  with  the  Lessee,  its 
executors,  administrators  and  assigns,  that  it  will  at  its  own 
expense  heat,  light,  furnish  water  and  keep  neat  and  clean  the 
stairs,  entries,  and  water  closets  in  said  building,  and  also  the 
premises  marked  A,  B,  and  C  on  the  annexed  diagrams. 


65 

3.     To  have  and  to  hold  the  said  rooms  and  other  premises, 
hereby  demised,  with  the  rights,  easements  and  appurtenances 
thereto  belonging,  unto  the  party  of  the  second  part,  its  succes- 
sors and  assigns,  from  the  first  day  of  January,   in  the  year 
eighteen  hundred  and  eighty,  during  the  full  term  of  twenty-five 
years  thence  next  ensuing,  including  and  counting  said  first  day 
of  January  as  part  of  said  term;  that  is  to  say,  the  said  term 
shall  be  regarded  as  commencing  on  and  with  said  first  day  of 
January,  A.  D.  1880,  and  as  ending  on  the  first  day  of  January, 
A.  D.  1905,  unless  sooner  terminated,  as  hereinafter  provided, 
yielding   and   paying    (except   only   in   case   of   fire   and   other 
casualty  as  hereinafter  mentioned)  the  rent  or  sum  of  one  hun- 
dred dollars  per  year  for  each  year  of  the  said  term,  payable  in 
yearly  payments;  the  first  payment  to  be  made  on  the  thirty-first 
day  of  December,  1880 ;  and  if  this  lease  should  terminate  for  any 
cause  between  two  rent  days,  a  proportionate  part  of  said  annual 
rent  to  be  paid  up  to  such  termination;  provided,  moreover,  that 
in  each  and  every  year  during  the  term  of  this  lease  in  which  the 
net  income  from  the  rental  of  boxes,  safes  and  places  of  deposit 
in  the  two  interior  great  vaults  of  the  company,  calculated  as 
hereinafter  set  forth,  received  by  the  lessee  shall  exceed  the  sum 
of  sixteen  thousand  dollars  (f  16,000)  one-half  of  said  excess  over 
said  sixteen  thousand  dollars   (f  16,000)   shall  be  paid  as  addi- 
tional rent  to  the  lessor  until  the  said  one-half  excess  amounts, 
with  the  one  hundred  dollars  aforesaid,  to  the  sum  of  twenty 
thousand  dollars   (f 20,000),  which  sum  shall  be  the  maximum 
rent  to  be  paid  to  the  said  lessor  in  any  one  year.     It  being  the 
intention  of  this  agreement:    1st.  That  the  lessors  shall  receive 
in  any  event  the  above  specified  rent  of  one  hundred  dollars. 
3d.  That  the  lessees  shall  next,  if  the  net  receipts  shall  be  suffi- 
cient therefor,   receive  sixteen  thousand   dollars    (f  16,000)    per 
year.    3d,  That  next,  all  the  net  receipts  above  sixteen  thousand 
dollars  (f  16,000)  shall  be  equally  divided  between  said  lessor  and 
lessee,  until  the  lessor's  rent  reaches  the  sum  of  twenty  thousand 
dollars  (|20,000)  per  year,  as  above  stipulated.    Provided,  how- 
ever, that  in  case  the  amount  to  be  paid  to  the  lessor  in  any  one 


66 

year  does  not  amount  to  twenty  thousand  dollars  ($20,000)  then 
nothing  shall  be  paid  to  said  lessor  from  the  receipts  of  any  suc- 
ceeding year  on  account  of  such  deficiency. 

4.  All  the  rent  to  be  paid  at  the  principal  office  of  the  said 
lessors  in  the  City  of  New  York,  in  lawful  money  of  the  United 
States.    It  being  understood  and  agreed  that  the  rent,  over  and 
above  said  amount  of  one  hundred  dollars,  shall  be  payable  on 
the  twenty-fifth  day  of  January  next  following,  for  each  year 
ending  on  the  first  day  of  January  then  last  past. 

5.  To  determine  the  net  income  for  the  purposes  of  this  agree- 
ment, the  accounts  of  the  lessee,  for  all  moneys  received  by  it 
for  the  rent  of  boxes,  safes  and  places  of  deposit  in  the  two 
interior  great  vaults  of  the  Company,  and  for  all  moneys  ex- 
pended by  it  in  the  conduct  of  its  business,  except  the  amounts* 
paid  as  dividends  and  interest  shall  be  made  up  each  year  dur- 
ing the  continuance  of  this  agreement,    to   and   including  the 
thirty-first  day  of  December,  and  the  sum  of  money  remaining 
after  deducting  the  expenditures  from   the   receipts   as    above 
described,  shall  be  considered  the  net  income  for  said  year. 

6.  And  if  at  any  time  or  times  during  the  continuance  of  this 
lease  the  said  lessor,  its  successors  or  assigns,  is  of  the  opinion 
that  the  expenditures  of  the  said  lessee  are  too  large,  it  is 
hereby  understood  and  agreed  that  on  the  demand  of  the  said 
lessor,  its  successors  or  assigns,  there  shall  be  appointed  three 
arbitrators,  one  by  the  said  lessor,  its  successors  or  assigns, 
one  by  the  said  lessee,  its  successors  or  assigns,  and  one  by  the 
two  persons  so  chosen  as  aforesaid.     In  case  the  said  lessee 
shall  neglect  to  appoint  an  arbitrator  after  ten  days'  demand  in 
writing  by  said  lessor,  its  successors  or  assigns,  the  said  lessor, 
its  successors  or  assigns,  shall  have  the  right  to  appoint  two 
arbitrators  who  shall  choose  a  third. 

7.  It  shall  be  the  duty  of  said  arbitrators  to  hear  the  parties 
and  thoroughly  investigate  all  said  expenditures  of  the  said 
lessee,  its  successors  or  assigns,  and  report  with  all  reasonable 
promptitude,  giving  each  party  reasonable  notice  of  the  time  and 
place  of  hearing,  what  action  shall  be  taken  by  the  parties  hereto 


with  reference  to  the  matter;  and  it  is  hereby  expressly  agreed 
that  the  decisions  and  recommendations  of  a  majority  of  the  said 
arbitrators  so  chosen  shall  be  final  and  conclusive  upon  the 
parties, 

8.  And  the  said  lessor,  its  successors  and  assigns,  for  the  con- 
sideration aforesaid,  hereby  covenants  and  agrees  to  and  with  the 
said  lessee,  its  successors  and  assigns,  that  the  said  lessor,  its 
successors  and  assigns,  will,  at  its  own  expense  and  charges,  alter, 
furnish  and  fit  up  in  a  proper  and  suitable  manner,  all  the  rooms 
herein  and  hereby  leased,  according  to  the  schedule  hereto  annexed 
and  marked  X;  and  will,  from  time  to  time,  during  the  con- 
tinuance of  this  lease,  erect  and  fit  up,  at  the  expense  of  the  said 
lessor,  its  successors  and  assigns,  as  many  safes  and  of  such 
description  as  may  be  in  the  opinion  of  both  lessee  and  lessor, 
their  successors  and  assigns,  necessary  for  the  use  of  the  said 
lessee  in  its  business;  line  the  interior  of  the  lower  granite  vault 
with  steel  or  otherwise,  in  the  most  approved  manner,  whenever 
the  same  shall  be  required  for  safes,  and  will  also  alter,  furnish 
and  fit  up  in  the  best  manner,  such  portions  of  the  cellars  and  of 
the  vaults  under  the  sidewalks  and  the  adjoining  premises  leased 
from  the  said  Charlotte  A.  Johnson  for  the  use  of  said  lessee,  as 
shall  be  in  the  opinion  of  both  lessee  and  lessor,  their  successors 
and  assigns,  required  by  the  business  of  said  lessee,  its  successors 
or  assigns.  And  all  extraordinary  repair  shall  be  at  the  expense 
of  the  said  lessor,  its  successors  or  assigns,  not,  however,  including 
minor  repairs  such  as  refitting  locks  and  replacing  window  glass. 
And  in  case  of  any  disagreement  between  the  said  lessor  and 
lessee,  their  successors  and  assigns,  with  regard  to  this  article 
(paragraph  8)  tlje  same  rule  for  arbitration  as  provided  in  para- 
graphs 6  and  7  above,  shall  be  applied,  provided  that  on  demand 
of  the  lessee,  its  successors  or  assigns,  there  shall  be  chosen  three 
arbitrators,  one  by  the  lessee,  its  successors  or  assigns,  one  by 
the  lessor,  its  successors  or  assigns,  and  one  by  the  two  so  chosen, 
and  in  case  the  lessor,  its  successors  or  assigns,  shall  neglect 
after  ten  days  demand  in  writing,  to  appoint  an  arbitrator,  the 
lessee,  its  successors  or  assigns,  shall  have  the  right  to  appoint 
two  arbitrators  who  shall  appoint  a  third  arbitrator. 


9.  It  being  understood  that  the  foregoing  provisions  as  to  the 
amount  of  rental  are  intended  only  as  a  method  of  determining 
the  amount  of  rent  hereby  reserved;  and  that  this  instrument 
shall  not  be  construed  as  in  any  wise  creating  a  partnership  be- 
tween the  parties  hereto,  nor  as  giving  to  the  lessor  any  interest 
in  the  business  of  the  lessee,  or  any  part  thereof,  nor  as  giving 
the  said  lessor  any  specific  lien  upon  or  right  to  the  receipts  from 
the  rent  of  safes,  or  boxes,  or  places  of  deposit  in  the  great  vaults, 
or  any  part  thereof. 

10.  And  the  said  lessee,  for  itself  and  its  successors  and  assigns, 
hereby  covenants  and  agrees  to  and  with  the  said  lessor,  its  suc- 
cessors and  assigns,  that  said  lessee,  its  successors  and  assigns, 
will,  during  the  said  term,  and  for  such  further  time  as  it  or  any 
other  person  or  persons  claiming  under  it  shall  hold  the  said 
premises,  or  any  part  thereof,  pay  unto  the  said  lessor,  its  suc- 
cessors or  assigns,  the  said  rent,  as  aforesaid  (except  only  in  case 
of  fire  or  other  casualty,  as  hereinafter  mentioned). 

11.  And  the  said  lessee,  its  successors  and  assigns,  further 
covenants  and  agrees  to  and  with  the  said  lessor,  its  successors 
and  assigns,  that  it  will  keep  all  and  singular  the  said  premises 
m  as  good  repair  as  the  same  are  in  at  the  commencement  of  said 
term,  or  may  be  put  in  during  the  continuance  thereof,  reasonable 
use  and  wearing  thereof  and  damage  by  fire  or  other  inevitable 
casualty  excepted ;  that  it  and  its  clerks,  servants  and  agents  will 
in  all  things  observe  and  perform  the  rules  and  regulations  in 
regard  to  the  said  building,  printed  upon  the  back  of  this  lease, 
and  to  which  this  lease  is  especially  made  subject;  and  further 
that  it  will  indemnify  and  save  harmless  the  said  lessor,  and  those 
having  its  estate  in  the  premises,  for  all  loss  and  damage  occas- 
ioned by  the  negligent  use  or  misuse  or  abuse  of  the  Cochituate 
water,  or  of  the  water  fixtures  or  of  the  steam  heating  apparatus, 
or  of  the  lighting  apparatus  by  the  said  lessee  or  by  those  having 
its  estate  in  the  premises,  or  by  any  person  or  persons  claiming 
under  it,  and  at  its  own  cost  and  charge  pay  for  all  such  damage. 

12.  And  the  said  lessee  for  itself,  its  successors  and  assigns, 
further  covenants  and  agrees  to  and  with  the  said  lessor,  its  suc- 
cessors and  assigns,  as  a  condition  of  this  lease,  that  said  lessee 


69 

or  those  having  its  estate  in  the  premises,  will  not  make  or  permit 
to  be  made,  any  alterations  or  additions  during  the  term  afore- 
said, in  or  to  the  said  demised  premises  or  any  part  thereof  that 
shall  violate  any  of  the  provisions  of  the  said  lease  of  Charlotte  A. 
Johnson  to  the  lessor  of  the  building  containing  a  part  of  the 
demised  premises,  or  that  shall  be  injurious  to  the  main  building 
of  the  lessor;  and  also,  that  it  shall  be  lawful  for  the  said  lessor 
and  those  having  its  estate  in  the  premises,  and  for  any  agent  or 
attorney  authorized  thereto  by  it,  at  all  reasonable  times  to 
enter  into  and  upon  the  same,  to  examine  the  conditions  thereof, 
and  make  all  needed  repairs ;  and  further  that  the  said  lessee  and 
those  having  its  estate  in  the  premises,  shall  and  will,  at  the 
expiration  of  the  said  term  or  termination  of  its  interest  and 
estate  in  the  demised  premises,  peaceably  yield  and  give  up  unto 
the  said  lessor  or  those  having  its  estate  therein,  all  and  singular, 
the  premises,  and  all  fixtures  and  future  erections  and  additions 
to  or  upon  the  same,  in  good  order  and  condition  in  all  respects, 
reasonable  wearing  and  use  thereof  and  damage  by  fire  and 
other  casualties  excepted. 

13.  Provided  always,  and  these  presents  are  upon  this  condi- 
tion, that  if  the  said  lessee  or  its  representatives  or  assigns  do  or 
shall  neglect  or  fail  to  perform  and  observe  any  or  either  of  the 
covenants  contained  in  this  instrument,  which  on  its  part  are 
to  be  performed,  or  if  the  said  lessee  shall  be  declared  bankrupt 
or  insolvent,  according  to  law,  or  if  any  assignment  shall  be 
made  of  its  property  for  the  benefit  of  creditors,  or  if  said  term, 
or  the  lessee's  interest  therein,  or  in  the  demised  premises,  shall 
be  attached  or  taken  on  execution,  or  upon  any  legal  process, 
then,  and  in  either  of  the  said  cases,  if  said  breach  shall  con- 
tinue for  thirty  days  after  notice  of  the  same  given  in  writing  by 
the  lessor,  or  those  having  its  estate  in  the  premises  to  the  les- 
see, or  those  having  its  estate  in  the  premises,  the  lessor,  or 
those  having  its  estate  in  the  premises,  lawfully  may,  immed- 
iately, or  at  any  time  thereafter,  and  whilst  such  neglect  or 
default  continues,  and  without  further  notice  or  demand,  except 
as  aforesaid,  enter  into  or  upon  the  said  premises,  or  any  part 


71) 

thereof,  in  the  name  of  the  whole,  and  repossess  the  same  as  of 
its  former  estate,  and  expel  the  said  lessee  and  those  claiming 
under  it,  and  remove  its  effects  (forcibly  if  necessary)  without 
being  taken  or  deemed  guilty  of  any  manner  of  trespass,  and 
without  prejudice  to  any  other  remedies  which  might  otherwise 
be  used  for  arrears  of  rent  or  preceding  breach  of  covenant, 
and  that  thereupon  this  lease  shall,  if  the  lessor  so  elect,  deter- 
mine, cease,  and  be  at  an  end. 

14.  It  is  further  hereby  expressly  agreed,  that  if  any  merchan 
dise  or  property  that  may  be  in  the  premises  during  said  term 
shall  be  injured  or  destroyed  by  water  or  otherwise,  no  part  of 
such  loss  or  damage  shall  be  borne  by  the  lessor,  unless  the  same 
shall  occur  by  reason  of  the  carelessness  or  negligence  of  any 
servant  or  agent  of  the  lessor,  or  otherwise;  also,  that  the  said 
lessee  will  use  no  chemical  burning  fluids  or  alcohol  in  lighting 
said  premises;  also,  will  pay  all  extra  insurance  on  the  build- 
ing, if  any  be  required,  on  account  of  extra  risk  in  the  use  of  the 
premises  thus  leased,  and  in  no  way  whatever  will  invalidate 
any  policies  of  insurance  on  the  same. 

15.  And  the  said  lessor,  its  successors  or  assigns,  covenants 
and  agrees  with  the  said  lessee,  its  successors  and  assigns,  that 
it  and  they  paying  the  rent  and  charges  aforesaid,  and  perform- 
ing the  covenants  herein  contained,  on  its  and  their  part  to  be 
paid  and  performed,  shall  peaceably  hold  and  enjoy  the  said  de- 
mised premises,  until  the  end  of  said  term  or  such  earlier  deter- 
mination of  this  lease  as  is  hereinbefore  provided. 

16.  It  is  further  understood  and  agreed  that  there  shall  be  a 
quarterly  statement  rendered  by  the  said  lessee,  its  successors 
and  assigns,  to  the  said  lessor,  its  successors  or  assigns,  which 
shall  give  a  full  statement  of  the  number  of  safes  under  rental, 
and  the  amount  of  income  derived  from  the  rental  or  compen- 
sation for  the  use  of  safes  or  places  of  deposit,  and  the  expense® 
above  allowed  to  'be  deducted  in  measuring  the  rent.    This  state- 
ment to  be  made  out  and  written  upon  a  blank  to  be  furnished  by 
the  said  lessor.     And  the  said  lessee,  for  itself,  its  successors  and 
assigns,  further  agrees  that  the  said  lessee,  its  successors  and 
assigns,  will,  at  all  reasonable  times,  give  information  with  regard 


71 

to  such  portion  of  its  affairs  as  will  enable  said  lessor,  its  suc- 
cessors or  assigns,  to  be  fully  cognizant  of  its  rights  in  the 
premises. 

17.  It  is  further  agreed  that  if  the  said  lessee,  its  successors 
or  assigns,  shall,  in  writing,  give  notice  to  said  lessor,  its  suc- 
cessors or  assigns,  on  or  before  the  first  day  of  October,  A.  D.,  one 
thousand  nine  hundred  and  four,  of  its  desire  to  renew  this  lease 
for  twenty-five  years  from  said  first  day  of  January,  A.  D.,  1905, 
then  the  lessor,  its  successors  or  assigns,  shall  so  renew  this  lease, 
upon  the  same  terms  and  with  all  its  covenants,  except  the  agree- 
ment set  forth  in  this  paragraph  (No.  17). 

18.  It  is  further  agreed,  that  if  the  said  lessee,  its  successors 
or  assigns,  shall,  in  writing,  give  notice  to  said  lessor,  its  suc- 
cessors or  assigns,  on  or  'before  the  first  day  of  October,  A.  D.,  one 
thousand  nine  hundred  and  twenty-nine,  of  its  desire  to  renew 
this  lease  for  twenty-five  years  from  the  first  day  of  Januuary, 
A.  D.,  1930,  then  the  lessor  shall  so  renew  this  lease  upon  the 
same  terms  and  with  all  its  covenants,  except  the  agreements  set 
forth  in  this  and  the  preceding  paragraphs  (Nos.  17  and  18). 

19.  It  is  further  agreed  that  if  the  said  lessee  shall  in  writing 
give  notice  to  said  lessor  on  or  before  the  first  day  of  October, 
A.  D.,  one  thousand  nine  hundred  and  fifty-four,  of  its  desire  to 
renew  this   lease   for   twenty-five   years  from  the   first   day   of 
January,  A.  D.,  1955,  then  the  lessor  shall  so  renew  this  lease 
upon  the  same  terms  and  with  all  its  covenants,  except  the  agree- 
ments set  forth  in  this  and  the  preceding  paragraphs  (Nos.  17,  18 
and  19). 

20.  And  it  is  further  agreed  that  if  the  said  Lessee,  its  suc- 
cessors or  assigns,  shall,  in  writing,  give  notice  to  said  Lessor, 
its  successors  and  assigns,  on1  or  before  the  first  day  of  October, 
A.  D.  1979,  of  its  desire  to  renew  this  lease  for  one  hundred  years 
from  the  first  day  of  January,  A.  D.  1980,  then  the  Lessor,  its 
successors  and  assigns,  shall  so  renew  this  lease  upon  the  same 
terms  and  with  all  its  covenants,  except  the  agreements  set  forth 
in  this  and  the  preceding  paragraphs  (Nos.  17,  18,  19  and  20). 
And  as  to  the  estate  leased1  to  'Charlotte  A.  Johnson.     Provided, 


72 

however,  that  if  the  said  Lessor  shall,  on  or  before  the  first  day  of 
January,  A.  D.  1980,  have  paid  to  the  Lessee  for  its  good  will  a 
sum  of  money  equal  to  six  times  the  gross  receipts  of  the  said 
Lessee  during  the  year  of  1979,  then  the  said  Lessor  shall  be  under 
no  obligation  to  grant  the  last  mentioned  renewal. 

21.  The  said  Lessor,  its  successors  or  assigns,  shall  have  the 
right,  if  at  any  time  it  or  they  shall  sell  the  said  building,  or  that 
the  whole  or  any  part  of  the  demised  premises  or  of  the  buildings 
of  which  they  form  a  part,  shall  be  taken  for  a  street,  or  for  any 
public  use  or  shall  be  destroyed  or  damaged  by  fire  or  other 
casualty  during  said  term  to  terminate  this  lease  on  payment  of 
such  a  sum  as  shall  be  equal  to  six  times  the  gross  receipts  of  the 
said  Lessee,  or  its  successors  or  assigns,  for  the  year  next  preced- 
ing the  said  sale.  Provided,  however,  in  the  event  of  such  sale 
or  other  termination  as  aforesaid  that  the  said  sum  to  be  so  paid 
shall  be  at  least  equal  to  the  sum  of  two  hundred  thousand  dollars. 

IN  WITNESS  WHEREOF,  the  said  Lessor  has  hereunto  caused  its 
corporate  seal  to  be  affixed  and  the  same  to  be  signed  by  Henry  B. 
Hyde,  its  President,  and  the  said  lessee  has  hereunto  caused  its 
corporate  seal  to  be  affixed  and  the  same  to  be  signed  by  E.  L.  S. 
Hammond,  its  Treasurer,  the  day  and  year  first  above  mentioned. 
Signed,  sealed  and  delivered 
in  the  presence  of 
(Signed)         SAMUEL  W.  BATES. 

[L.    S.] 

SEAL  OF  THE  EQUITABLE  LIFE 

ASSURANCE  SOCIETY 
(Signed)          HENKY  B.  HYDE,  President 

Equitable  Life  Assurance  Society  of 
the  United  States. 

Attest.         (Signed)          SAMUEL  BOKKOWE,  Secretary. 
(Signed)          E.  L.  S.  HAMMOND,  Treasurer 

of  Equitable  Safe  Deposit  Company. 

[L.    S.] 

SEAL  OF  THE  EQUITABLE  SAFE 
DEPOSIT  CO. 


73 
EXHIBIT    III. 

AGREEMENT,  made  this  eighth  day  of  November,  1888,  between 
The  Equitable  Life  Assurance  Society  of  the  United  States,  party 
of  the  first  part,  and  The  Security  Safe  Deposit  Company,  party 
of  the  second  part: 

Whereas,  The  party  of  the  first  part  heretofore  executed  a  lease 
to  the  Equitable  Safe  Deposit  Company,  bearing  date  the  first 
day  of  January,  1880,  of  certain  premises  located  on  Federal  and 
Milk  streets  in  the  City  of  Boston,  for  the  use  of  the  said 
Equitable  Safe  Deposit  Company  in  carrying  on  its  business ;  and 

Whereas,  the  party  of  the  second  part  hereto  has  succeeded  to 
the  rights  of  the  said  Equitable  Safe  Deposit  Company  under  said 
lease;  and 

Whereas,  the  party  of  the  first  part  has  now  constructed  a  new 
building  at  the  corner  of  said  Federal  and  Milk  streets  in  the 
City  of  Boston  connected  with  the  building,  including  the  premises 
covered  by  the  aforesaid  lease,  and  the  party  of  the  first  part  has 
agreed  to  lease  to  the  party  of  the  second  part  the  basement  and 
ground  floor  of  said  new  building: 

Now  therefore  this  AGREEMENT  Witnesseth :  That  the  party  of 
the  first  part,  in  consideration  of  the  premises,  and  of  the  terms 
and  conditions  for  the  payment  of  rent  provided  for  in  said  lease 
does  hereby  lease  to  the  said  party  of  the  second  part  said  base- 
ment and  ground  floor  of  said  new  building,  the  same  to  be  added 
to  and  become  a  part  of  the  premises  included  in  and  covered  by 
said  lease. 

The  consideration  for  the  lease  of  said  basement  and  ground 
floor  to  be  of  the  same  character  and  to  the  same  extent  in  regard 
to  said  basement  and  ground  floor  as  are  provided  for  in  said 
lease  of  January  1,  1880. 

The  true  intent  of  this  agreement  being  that  said  basement  and 
ground  floor  of  said  new  building  shall  be  and  become  part  of  the 
premises  covered  by  said  lease,  the  same  as  though  they  had  been 
included  in  it  at  the  time  of  the  execution  thereof. 

And  the  party  of  the  second  part  in  consideration  of  the  agree- 
ment of  the  party  of  the  first  part  herein  contained  agrees  to 


74 

accept  the  lease  of  said  basement  and  ground  floor  of  said  new 
building  upon  the  same  terms  and  conditions  with  regard  to  the 
payment  of  rent  and  of  all  other  matters  as  are  contained  in  said 
lease  of  January  1, 1880. 

It  is  further  specially  agreed  by  and  between  the  parties 
hereto,  that  the  said  lessor  shall  have  the  right  to  supply  its 
own  janitor  of  said  premises,  or  to  have  the  same  taken  care  of 
by  a  janitor  to  be  provided  by  the  lessee  upon  such  terms  as 
may  be  agreed  upon  between  the  parties  hereto,  making  an 
allowance  to  the  Security  Safe  Deposit  Company. 

IN  WITNESS  WHEREOF,  the  said  lessor  has  caused  its  cor- 
porate seal  to  be  hereunto  affixed,  and  these  presents 
to  be  signed  by  its  Vice-President  and  Secretary,  and 
the  said  lessee  has  caused  its  corporate  seal  to  be 
hereunto  affixed  and  these  presents  to  be  signed  by  its 
President  and  Secretary,  the  day  and  year  first  herein 
written.  In  duplicate.  ' 

THE  EQUITABLE  LIFE  ASSURANCE 

SOCIETY  OF  THE  U.  S. 

(Signed)         by  JAMES  W.  ALEXANDER,  'Vice-President. 
(Signed)  W.  ALEXANDER,  Secretary. 

[SEAL] 

THE  SECURITY  SAFE  DEPOSIT 
COMPANY, 

(Signed)         by  EZRA  FARNSWORTH,  President. 
(Signed)  E.  L.  S.  HAMMOND,  Treasurer. 

[SEAL] 

STATE  OF  NEW  YORK,       ) 

[  00  • 

CITY  AND  COUNTY  OF  NEW  YORK,  j 

BE  IT  REMEMBERED  that  on  this  8th  day  of  November,  A.  D. 
1888,  before  me,  A.  R.  Fullerton,  a  Notairy  Public  of  the  State  of 
New  York,  in  and  for  the  county  of  Kings,  certificate  filed  in  New 
York  County  and  residing  in  said  county  of  Kings,  personally 
appeared  James  W.  Alexander,  the  Vice-President  of  the  Equit- 
able Life  Assurance  Society  of  the  United  States,  and  William 


75 

Alexander,  the  Secretary  of  the  same  society,  to  me  respectively 
and  personally  known  to  be  such,  did  depose  and  say,  that  he, 
said  James  W.  Alexander,  resided  in  the  'City  of  New  York,  New 
York,  that  he,  said  William  Alexander,  resided  in  the  City- of- 
New  York,  New  York,  that  he,  said  James  W.  Alexander,  was 
the  Vice-President  of  the  said  Society,  and  that  he,  said  William 
Alexander,  was  the  Secretary  of  the  said  Society,  that  they  know 
the  corporate  seal  of  said  Society,  that  the  seal  affixed  to  the 
.annexed  instrument  is  such  corporate  seal,  that  it  was  so  affixed 
thereto  by  the  order  of  the  Board  of  Directors  of  said  Society, 
and  that  they,  the  said  James  W.  Alexander  and  William  Alex- 
ander signed  their  names  thereto  by  the  like  order,  as  Vice-Presi- 
dent and  Secretary  of  the  said  Society  respectively. 

And  the  said  James  W.  Alexander  as  Vice-President,  and 
William  Alexander  as  Secretary  above  mentioned,  further  ac- 
knowledged to  me  that  they  had  executed  the  said  instrument  to 
be  their  free  and  voluntary  act  and  deed  of  said  Society  for  the 
uses  and  purposes  therein  expressed. 

In  witness  whereof,  I  have  hereunto  set  my  hand  and  af- 
fixed  my   official   seal   on   the   day   arid   year   above 
[SEAL]     written. 

(Signed)  A.  R.  FULLERTON, 

Notary  Public,  Kings  County. 
(Certificate  filed  in  New  York  County.) 


EXHIBIT  IV. 

THIS  INDENTURE,  made  the  ninth  day  of  November,  1888,  be- 
tween The  Equitable  Life  Assurance  Society  of  the  United  States, 
a  corporation  organized  and  existing  under  the  laws  of  the  State 
of  New  York,  herein  designated  as  lessor,  party  of  the  first  part, 
and  The  Missouri  Safe  Deposit  Company,  a  corporation  created 
under  the  laws  of  the  State  of  Missouri,  herein  designated  as  the 
lessee,  party  of  the  second  part,  WITNESSETH  : — 

WHEREAS,  by  a  certain  indenture  of  lease,  bearing  date  the  sec- 
ond day  of  January,  1886,  the  party  of  the  first  part  hereto  did 


76 

lease  unto  the  Mercantile  Trust  Company  certain  rooms  in  and 
portions  of  the  building  owned  by  the  said  party  of  the  first  part, 
and  known  as  the  Equitable  Building,  located  on  the  northwest 
corner  of  Locust  and  Sixth  "streets,  in  the  City  of  St  Louis,  in  the 
State  of  Missouri ;  and, 

WHEREAS,  the  said  indenture  of  lease  was  duly  assigned  by  the 
said  The  Mercantile  Trust  Company  to  the  party  hereto  of  the 
second  part;  and, 

WHEREAS,  the  party  of  the  second  part,  lessee  as  aforesaid,  has 
asked  that  the  rooms  and  portions  of  the  building  known  as  the 
Equitable  Building  in  the  City  of  St.  Louis,  in  the  State  of  Mis- 
souri, and  now  held  by  the  said  lessee  under  the  terms  of  the  said 
lease  bearing  date  the  second  day  of  January,  1886,  be  more  fully 
described,  and  the  lessor  having  consented  thereto;  and, 

WHEREAS,  both  parties  to  the  said  lease  desire  certain  other 
changes  in  the  terms  thereof : 

Now  THEREFORE  THIS  INDENTURE  WITNESSETH,  that  the  said  in- 
denture of  lease,  bearing  date  the  second  day  of  January,  1886,  is 
by  mutual  agreement  cancelled,  and  the  party  of  the  second  part 
hereto  does  hereby  surrender  the  same,  which  surrender  is  accepted 
by  the  lessor  hereinbefore  named,  and  the  following  is  substituted 
and  accepted  by  both  parties  hereto  as  the  lease  of  said  rooms  and 
portions  of  said  building,  in  place  of  the  covenants,  agreements, 
and  provisions  in  said  surrendered  lease  contained,  namely : 

1.  That  in  consideration  of  the  covenants  herein  contained  on 
the  part  of  the  said  party  of  the  second  part  and  its  representa- 
tives, to  be  kept  and  performed,  the  said  pa.rty  of  the  first  part 
doth  hereby  grant,  demise,  and  lease  unto  the  said  party  of  the 
second  part,  its  successors  and  assigns,  the  following  described 
rooms  and  portions  of  the  building  known  as  the  "  Equitable 
Building,"  and  situated  on  the  northwest  corner  of  Locust  and 
Sixth  streets,  in  the  City  of  St.  Louis  and  State  of  Missouri,  to- 
wit :  Booms  D,  E,  F,  G,  H,  I,  J,  K,  and  L  in  the  basement  of  said 
building,  as  shown  on  diagram  "A,"  hereto  annexed  and  colored 
red  thereon,  and  vaults  1,  2,  3,  4,  5,  6,  7,  8,  9,  and  10,  in  the  sub- 
basement  of  said  building,  as  shown  on  diagram  "  B,"  hereto 


77 

annexed  and  colored  red  thereon;  to  be  used  for  the  purposes  of 
the  corporation,  and  for  similar  purposes,  with  the  right  to  use, 
free  of  charge,  in  common  with  others,  the  elevators  in  said  build- 
ing and  the  water-closets  on  said  premises. 

2.  And  the  lessor  covenants  and  agrees  with  the  lessee,  its  suc- 
cessors, legal  representatives  and  assigns,  that  it  will,  at  its  own 
expense  heat,  light,  furnish  water  and  keep  neat  and  clean  the 
stairs,  entries,  and  water-closets  in  said  building,  and  also  the 
premises  marked  on  the  annexed  diagrams. 

The  said  lessor  shall  have  the  right  to  supply  its  own  janitor 
of  said  premises,  or  to  have  the  same  taken  care  of  by  a  janitor 
to  be  provided  by  the  lessee  upon  such  terms  as  may  be  agreed 
upon  between  the  parties  hereto,  making  an  allowance  to  the 
lessee  for  such  services. 

3.  To  have  and  to  hold  the  said  rooms  and  other  premises 
hereby  demised  with  the  rights,  easements,  and  appurtenances 
thereto  belonging  unto  the  party  of  the  second  part,  its  successors 
and  assigns,  from  the  first  day  of  April,  1886,  during  the  full  term 
of  twenty-five  years  thence  next  ensuing,  including  and  counting 
said  first  day  of  April  as  part  of  said  term;  that  is  to  say,  the 
said  term  shall  be  regarded  as  commencing  on  and  with  said  first 
day  of  April,  A.  D.,  1886,  and  as  ending  on  the  thirty-first  day  of 
March,  A.  D.,  1911,  unless  sooner  terminated  as  hereinafter  pro- 
vided, yielding  and  paying  (except  only  in  case  of  fire  or  other 
casualty  as  hereinafter  mentioned),  the  rent  sum  of  one  hun- 
dred ($100)  dollars  per  year,  for  each  year  of  the  said  term,  pay- 
able in  yearly  payments,  the  first  payment  to  be  made  on  the 
thirty-first  day  of  March,  1887;  and  if  this    lease    should    ter- 
minate, for  any  cause,  between  two  rent  days,  a  proportionate 
part  of  said  annual  rent  to  be  paid  up  to  such  termination. 

PROVIDED,,  moreover,  that  in  each  and  every  year  during  the 
term  of  this  lease  in  which  the  net  income  from  the  rental  of 
boxes,  safes,  and  places  of  deposit  in  the  interior  great  vault  of 
the  Company,  calculated  as  hereinafter  set  forth,  received  by 
the  lessee  shall  exceed  the  sum  of  twenty  thousand  ($20,000) 
dollars,  one-half  of  said  excess  over  said  twenty  thousand  dol- 


78 

lars  shall  be  paid  as  additional  rent  to  the  lessor,  so  long  as 
such  rents  continue  to  exceed  the  sum  of  twenty  thousand  dol- 
lars, during  the  continuance  of  this  lease  (until  the  said  one-half 
excess  amounts,  with  the/one  hundred  dollars  aforesaid,  to  the 
sum  of  twenty  thousand  dollars,  which  sum  shall  be  the  maxi- 
mum rent  to  be  paid  to  the  said  lessor  in  any  one  year).  It 
being  the  intention  of  this  agreement:  1.  That  the  lessors  shall 
receive,  in  any  event,  the  above  specified  rent  of  one  hundred 
dollars.  2.  That  the  lessors  shall  next,  if  the  net  receipts  shall 
exceed  the  sum  of  twenty  thousand  dollars,  receive  one-half  of 
the  excess  of  said  rents  above  said  sum  of  twenty  thousand  dol- 
lars per  year.  3.  That  next,  all  the  net  receipts  above  twenty 
thousand  dollars  shall  be  equally  divided  between  said  lessor 
and  lessee,  until  the  termination  of  this  lease,  but  not  to  exceed 
$20,000  to  the  lessor  in  any  one  year.  Provided,  however,  that 
in  case  the  amount  to  be  paid  the  lessor  in  any  one  year  does  not 
amount  to  twenty  thousand  dollars,  then  nothing  shall  be  paid 
to  said  lessor  from  the  receipts  of  any  succeeding  year  on  account 
of  such  deficiency. 

4.  All  the  rent  to  be  paid  at  the  principal  office  of  the  said 
lessor  in  the  City  of  New  York,  in  lawful  money  of  the  United 
States,  it  being  understood  and  agreed  that  the  rent  over  and 
above  said  amount  of  one  hundred  dollars  shall  be  payable  on 
the  first  day  of  April  for  the  year  ending  on  the  thirty-first  day 
of  March  then  last  past. 

5.  To  determine  the  net  income  for  the  purposes  of  this  agree- 
ment, the  accounts  of  the  Lessee  for  all  moneys  received  by  it 
for  the  rent  of  boxes,  safes,  and  places  of  deposit  in  the  great 
vault  of  the  company,  and  for  all  moneys  expended  by  it  in  the 
conduct  of  its  business,  except  the  amounts  paid  as  dividends  and 
interest,  shall  be  made  up  each  year  during  the  continuance  of 
this  agreement  to  and  including  the  thirty-first  day  of  March,  and 
the  sum  of  money  remaining  after  deducting  the  expenditures 
from  the  receipts  as  above  described,  shall  be  considered  the  net 
income  for  said  year. 

6.  And  if,  at  any  time  or  times  during  the  continuance  of  this 
lease,  the  said  lessor,  its  successors  or  assigns,  is  of  the  opinion 


79 


that  the  expenditures  of  the  said  lessee  are  too  large,  it  is  hereby 
understood  and  agreed  that  upon  demand  of  the  said  lessor,  its 
successors  or  assigns,  there  shall  be  appointed  three  arbitrators, 
one  by  the  said  lessor,  its  successors  or  assigns,  one  by  the  said 
lessee,  its  successors  or  assigns,  and  one  by  the  two  persons  so 
chosen,  as  aforesaid.  In  case  the  said  lessee  shall  neglect  to  ap- 
point an  arbitrator  after  ten  days'  demand  in  writing  by  the 
said  lessor,  its  successors  or  assigns,  the  said  lessor,  its  successors 
or  assigns,  shall  have  the  right  to  appoint  two  arbitrators,  who 
shall  choose  a  third. 

7.  It  shall  be  the  duty  of  said  arbitrators  to  hear  the  parties 
and   thoroughly   investigate   all   said   expenditures   of   the   said 
lessee,  its  successors  or  assigns,  and  report  with  all  reasonable 
promptitude,  giving  each  party  reasonable  notice  of  the  time  and 
place  of  hearing,  what  action  shall  be  taken  by  the  parties  hereto 
with  reference  to  the  matter. 

And  it  is  hereby  expressly  agreed  that  the  decisions  and  recom- 
mendations of  a  majority  of  the  said  arbitrators  so  chosen  shall 
be  final  and  conclusive  upon  the  parties. 

8.  The  said  lessor  agrees  that  it  will,  during  the  continuance 
of  this  lease,  pay  all  taxes  and  assessments  on  said  property,  or 
which  may  be  levied  or  due  from  the  lessee  to  any  state,  com- 
munity or  municipality;  that  it  will  pay  all  expenses  of  protecting 
said  property  hereby  leased ;  that  it  will  at  its  own  expense  make 
all  repairs,  replacements,  and  additions,  if  the  business  requires 
it,  to  the  said  premises,  and  the  appurtenances,  including  vaults, 
safes,  locks,  desks,  signs,  carpets,  and  all  other  property  and 
that  on  the  demand  of  the  lessees  it  will,  if  the  business  justifies 
it,  increase  at  its  own  expense  the  facilities  for  doing  business 
on  such  premises  by  making  the  additions  aforesaid,  it  being 
understood  that  the  persons  who  shall  guard  the  said  premises 
and  the  clerks  shall  be  employed  and  paid  by  the  lessee. 

9.  It  being  understood  that  the  foregoing  provisions  as  to  the 
amount  of  rental  are  intended  only  as  a  means  of  determining 
the  amount  of  rent  hereby  reserved,  and  that  this  instrument 
shall  not  be  construed  as  in  any  wise  creating  a  partnership 


80 

between  the  parties  hereto,  nor  as  giving  to  the  lessor  any  inter- 
est in  the  business  of  the  lessee  or  any  part  thereof,  or  any 
control  thereof,  nor  as  giving  the  said  lessor  any  specific  lien 
upon  or  right  to  the  receipts  from  the  rents  of  safes,  or  boxes, 
or  places  of  deposit  in  the  great  vaults,  or  any  part  thereof. 

10.  And  the  said  lessee,  for  itself,  and  its  successors  and 
assigns,  hereby  covenants  and  agrees  to  and  with  the  said  lessor, 
its  successors  and  assigns,  that  during  the  said  term  and  for 
such  further  time  as  it  or  any  other  person  or  persons  claiming 
under  it  shall  hold  the  said  premises  or  any  part  thereof,  will 
pay  unto  the  said  lessor,  its  successor's  or  assigns,  the  said  rent 
as  aforesaid,  except  only  in  case  of  fire  or  other  casualty  a>s  here- 
inafter mentioned. 

11.  And  the  said  lessor,   its  successor  and  assigns,  further 
covenants  and  agrees  to  and  with  the  said  lessee,  its  successors 
and  assigns,  that  it  will  keep  all  and  singular  the  said  premises 
in  as  good  repair  as  the  same  are  in  at  the  commencement  of  said 
term,  damage  by  fire  or  other  inevitable  casualty  excepted.     The 
said  lessee  agrees  that  the  clerks,  servants,  and  agents,  will  in  all 
things  observe  and  perform  the  rules  and  regulations  in  regard  to 
the  said  building,  which  from  time  to  time,  may  be  enacted. 

12.  And  the  said  lessee,  for  itself,  its  successors  and  assigns, 
further  covenants  and  agrees  to  and  with  the  said  lessor,  its 
successors  and  assigns,  as  a  condition  of  this  lease,  that  the  said 
lessee  or  those  having  its  estate  in  the  premises,  will  not  make  or 
permit  to  be  made  any  alterations  or  additions  during  the  term 
aforesaid,  in  or  to  the  said  demised  premises  or  any  part  thereof, 
that  shall  violate  any  of  the  provisions  of  the  said  lease,  or  that 
shall  be  injurious  to  the  building  or  the  said  lessor. 

And,  also,  that  it  shall  be  lawful  for  the  said  lessor,  and  those 
having  its  estate  in  the  premises,  and  for  any  agent  or  attorney 
specifically  authorized  in  writing  thereto  by  it  at  all  seasonable 
times  to  enter  into  and  upon  the  same  to  examine  the  conditions 
thereof  and  make  all  needed  repairs.  And,  further,  that  the  said 
lessee,  and  those  having  its  estate  in  the  premises,  shall  and  will, 
at  the  expiration  of  the  said  term,  or  expiration  of  its  interest 


81 

and  estate  therein,  surrender  all  and  singular  the  premises  and 
all  fixtures  and  future  erections  and  additions  to  or  upon  the 
same  in  good  order  and  condition  in  all  respects,  reasonable  wear- 
ing and  use  thereof  and  damage  by  fire  or  other  casualties 
except  ed. 

13.  Provided,  always,  and  these  presents  are  upon  this  con- 
dition, that  if  the  said  lessee  or  its  representatives  or  assigns, 
do  or  shall  neglect  or  fail  to  perform  or  observe  any  or  either  of 
the  covenants  contained  in  this  instrument  which  on  its  part  are 
to  be  performed,  after  six  months  notice  of  the  same  given  in 
writing  by  the  lessor,  or  those  having  its  estate  in  the  premises, 
to  the  officers  and  directors  of  the  Missouri  Safe  Deposit  Company, 
or  those  having  its  estate  on  the  premises,  and  while  such  neglect 
or  default  continues,  and  without  further  notice  or  demand  ex- 
cept as  aforesaid,  the  said  lessor  may  enter  into  or  upon  the  said 
premises  or  any  part  thereof,  in  the  name  of  the  whole,  and  re- 
possess the  same  as  of  its  former  estate,  and  expel  the  said  lessee 
and  those  claiming  under  it,  and  remove  its  effects   (forcibly  if 
necessary)  without  being  taken  or  deemed  guilty  of  any  manner 
of  trespass  and  without  prejudice  to  any  other  remedies  which 
might  otherwise  be  used  for  arrears  of  rent  or  preceding  breach  of 
covenant,  and  that  thereupon  this  lease  shall,  if  the  lessor  so  elect, 
determine,  cease,  and  be  at  an  end. 

14.  And  the  said  lessor,  its  successors  and  assigns,  covenants 
and  agrees  with  the  said  lessee,  its  successors  and  assigns,  that  the 
said  lessee  (they  paying  the  rent  and  charges  aforesaid  and  per- 
forming the  covenants  herein  contained  on  its  and  their  part  to  be 
paid  and  performed)    shall  peaceably  hold  and  enjoy  the  said 
demised  premises  until  the  end  of  said  term  or  such  earlier  deter- 
mination of  this  lease  as  is  hereinafter  provided. 

15.  It  is  further  understood  and  agreed  that  there  shall  be  a 
quarterly  statement  rendered  by  the  said  lessee,  its  successors  or 
assigns,  to  the  said  lessor,  its1  successors  or  assigns,  which  shall 
give  a  full  statement  of  the  number  of  safes  under  rental,  and  the 
amount  of  income  derived  from  the  rental  or  compensation  for  the 
use  of  safes  or  places  of  deposit,  and  the  expense  above  allowed  to 


82 

be  deducted  in  measuring  the  rent,  this  statement  to  be  made  out 
and  written  upon  a  blank  to  be  furnished  by  the  said  lessor. 

And  the  said  lessor,  for  itself,  its  successors  and  assigns,  further 
agrees  that  said  lessee,  its  successors  or  assigns,  will,  at  all  reason- 
able times,  give  information  with  regard  to  such  portion  of  its 
affairs  as  will  enable  said  lessor,  its  successors  or  assigns,  to  be 
fully  cognizant  of  its  rights  in  the  premises. 

16.  It  is, further  agreed  that  if  the  said  lessee,  its  successors 
or  assigns  shall,  in  writing,  give  notice  to  said  lessor,  its  suc- 
cessors or  assigns,  on  or  before  the  first  day  of  January,  A.  D. 
1911,  of  its  desire  to  renew  this  lease  for  a  further  term  of  fifty 
years  from  the  said  first  day  of  April,  A.  D.  1911,  then  the  lessor, 
its  successors  or  assigns,  shall  so  renew  this  lease  upon  the  same 
terms  and  with  all  its  covenants,  except  the  agreement  set  forth 
in  this  paragraph  No.  16. 

17.  It  is  further  agreed  that  if  the  said  lessee,  its  successors 
or  assigns,  shall  in  writing  give  notice  to  the  said  lessor,  its 
successors  or  assigns,  on  or  before  the  first  day  of  January, 
1961,  of  its  desire  to  renew  this  lease  for  fifty  years  from  the 
first  day  of  April,  1961,  then  the  lessor  shall  so  renew  this 
lease  upon  the  same  terms  and  all  its  covenants,  except  the 
agreement  set  forth  in  this  and  the  preceding  paragraphs  No®. 
16  and  17. 

18.  The  said  lessor,  its  successors    or    assigns,    shall    have 
the  right,  if,  at  any  time,  it  or  they  shall  sell  the  said  building, 
or  if  the  whole  or  any  part  of  the  demised  premises  or  of  the 
buildings  of  which  they  form  a  part,  shall  be  taken  for  a  street 
or  for  any  public  use,  or  shall  be  destroyed  or  damaged  by  fire 
or  other  casualty  during  said  term,  to  terminate  this  lease  on 
payment  of  such  a  sum  as  shall  be  equal  to  six  times  the  gross 
receipts  of  the  said  lessee,  or  its  successors  or  assigns  for  the 
year  next  preceding  the  said  sale. 

Provided,  however,  in  the  event  of  such  sale  or  other  termina- 
tion as  aforesaid,  that  the  said  sum  so  paid  shall  be  at  least 
equal  to  the  sum  of  two  hundred  thousand  dollars. 

In  witness  whereof,  the  said  lessor  has  caused  its  corporate 
seal  to  be  hereunto  affixed,  and  these  presents  to  be  signed  by 


83 

its  Vice-President  and  Secretary,  and  the  said  lessee  has  caused 
its  corporate  seal  to  be  hereunto  affixed  and  these  presents  to  be 
signed  by  its  President  and  Secretary  the  day  and  year  first 
herein  written.  In  duplicate. 

THE   EQUITABLE   LIFE   ASSURANCE   SOCIETY 

OF    THE    UNITED    STATES, 
[SEAL]  (Signed)     By  JAMES  W.  ALEXANDER, 

Vice-President, 
(Signed)  W.  ALEXANDER, 

Secretary. 

THE    MISSOURI    SAFE    DEPOSIT    COMPANY, 
[SEAL]  (Signed)     By  JAMES  JAUNCEY  HOYT, 

President. 
Attest : 

(Signed)     J.  S.  KENDRICK,  Secretary. 


EXHIBIT  V. 

THIS  AGREEMENT,  made  this  twentieth  day  of  December,  1894, 
between  The  Equitable  Life  Assurance  Society  of  the  United 
States,  a  corporation  organized  and  existing  undei'  the  laws  of 
tne  State  of  New  York,  party  of  the  first  part  and  The  Missouri 
Safe  Deposit  Company,  party  of  the  second  part,  witnesseth, 

WHEREAS,  The  Equitable  Life  Assurance  Society  of  the  United 
States  made  a  lease  on  the  isecond  day  of  January,  1886,  to  The 
Mercantile  Trust  Company,  which  lease,  together  with  other 
premises  subsequently  by  an  agreement  dated  the  ninth  day  of 
November,  1888,  came  into  possession  of  the  party  of  the  second 
part, 

Now  THIS  AGREEMENT  WITNESSETH,  That  for  and  in  considera- 
tion of  one  dollar  to  it  in  hand  paid,  the  receipt  whereof  is  hereby 
acknowledged,  the  parties  hereto  hereby  agree  that  the  descrip- 
tion contained  in  said  lease  and  said  subsequent  agreement  be 
so  amended  and  changed  as  to  include  the  rooms  M  and  N 
indicated  on  the  diagram,  which  is  hereto  annexed  and  forms 


84 

a  part  of  this  agreement,  such  additional  space  being  held  under 
terms  and  conditions  of  the  original  agreement  and  the  amend- 
ments thereof  and  the  same  to  be  held  without  further  cost  or 
rental  to  the  party  of  the  second  part. 

IN  WITNESS  WHEREOF,  The  said  lessor  has  caused  its  corporate 
seal  to  be  hereunto  affixed  and  these  presents  to  be  signed  by 
its  Vice  President  and  Secretary,  and  the  siaid  lessee  has  caused 
its  corporate  seal  to  be  hereunto  affixed,  and  these  presents  to 
be  signed  by  its  Vice  President  and  Secretary  the  day  and  year 
first  herein  written  in  duplicate. 

(Signed)         JAMES  W.  ALEXANDER, 

Vice  President. 
[SEAL]  (Signed)         W.  ALEXANDER, 

Secretary. 
(Signed)         PASCHALL  CARR, 

Vice  President. 
[SEAL]  (Signed)         J.  S.  KENDRIGK, 

Secretary. 


[REFERRING  TO  PAGE  38] 


I  wish  to  correct  an  error  in  this  preliminary  report.  In  the 
discussion  of  the  syndicate  transactions  the  report  says,  "All 
these  gentlemen  (including  Mr.  Alvin  W.  Krech,  PBesident  of  the 
Equitable  Trust  Company)  who  divided  these  profits  were  direc- 
tors of  the  Society  and  six  of  them  members  of  the  Executive 
and  Finance  Committees."  Mr.  Mclntyre,  testifying  as  to  the 
particular  syndicates  in  which  Mr.  Krech  participated,  said, 
"  The  two  men  in  that  list,  Mr.  Mclntyre  and  Mr.  Krech,  were 
not  members  of  either  the  Executive  or  Finance  Committees." 

Furthermore,  in  the  letter  from  Mr.  Hyde  to  Mr.  Frick,  a 
copy  of  which  was  served  on  me,  red  stars  appear  before  the 
names  of  Mr.  Mclntyre  and  Mr.  Krech,  calling  special  attention 
to  the  following  footnote:  "  (Not  member  of  Executive  or 
Finance  Committees)".  Mr.  Mclntyre  was  a  director  of  the 
Society  >and  the  inference  was  drawn  by  the  Frick  Committee, 
as  well  as  myself,  that  Mr.  Krech  was  also.  However,  since 
the  publication  of  the  report,  I  have  received  the  certificate  of 
Mr.  Hyde  that  these  syndicate  transactions  were  closed  on  July 
13,  1901,  and  the  certificate  of  William  Alexander,  Secretary  of 
the  Society,  that  Mr.  Krech  was  first  elected  a  director  on 
August  3,  1904.  It  follows,  therefore,  that  his  participations  in 
the  syndicate  transactions  were  terminated  twenty-one  days 
before  he  became  a  director. 

I  am  pleased  to  make  this  correction. 

FRANCIS  HENDBICKS, 

Superintendent  of  Insurance. 
Dated  ALBANY,  June  26,  1905. 


INIVEBSITY  OF  CALIFORNIA  LIBRARY 


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prior  to  due 


university  of  Calif orniz 
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